EDGAR 10-K Filing

Company CIK: 880417
Filing Year: 2025
Filename: 880417_10-K_2025_0000950170-25-039227.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS.
General
CSB Bancorp, Inc. (“CSB”), is a registered financial holding company under the Bank Holding Company Act of 1956, as amended, and was incorporated under the laws of the State of Ohio in 1991. The Commercial and Savings Bank of Millersburg, Ohio (the “Bank”), an Ohio bank chartered in 1879, is a wholly owned subsidiary of CSB. The Bank is a member of the Federal Reserve System, and its deposits are insured up to the maximum amount provided by law by the Federal Deposit Insurance Corporation (“FDIC”). The primary regulators of the Bank are the Federal Reserve Board and the Ohio Division of Financial Institutions. CSB Investment Services, LLC, an Ohio limited liability company (“CSB Investment”), is a wholly owned subsidiary of CSB that is licensed to engage in the business of insurance in the State of Ohio. In this Annual Report on Form 10-K, CSB and its subsidiaries are sometimes collectively referred to as the “Company.”
Cautionary Statement Regarding Forward-Looking Information
Certain statements contained in this Annual Report on Form 10-K, which are not statements of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipate”, “estimates”, “may”, “feels”, “expects”, “believes”, “plans”, “will”, “would”, “should”, “could” and similar expressions are intended to identify these forward-looking statements but are not the exclusive means of identifying such statements. Examples of forward-looking statements include: (i) projections of income or expense, earnings per share, the payment or non-payment of dividends, capital structure, and other financial items; (ii) statements of plans and objectives of the Company and of its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially.
Other factors not currently anticipated may also materially and adversely affect the Company’s business, financial condition, results of operations, or cash flows. There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in this Annual Report on Form 10-K are reasonable, the reader should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. The Company does not undertake, and expressly disclaims, any obligation to update or alter any statements whether as a result of new information, future events, or otherwise, except as may be required by applicable law.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the forward-looking statements. The Company desires to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.
Business Overview and Lending Activities
CSB operates primarily through the Bank and CSB Investment Services, LLC, providing a wide range of banking, trust, financial, and brokerage services to corporate, institutional, and individual customers throughout northeast Ohio. The Bank provides retail and commercial banking services to its customers, including checking and savings accounts, time deposits, IRAs, safe deposit facilities, personal loans, commercial loans, real estate mortgage loans, installment loans, night depository facilities, brokerage, and trust services.
The Bank provides residential real estate, commercial real estate, commercial, and consumer loans to customers located primarily in Holmes, Stark, Tuscarawas, Wayne, and portions of surrounding counties in Ohio. The Bank’s market area has historically exhibited relatively stable economic conditions. Economic activity grew modestly in the fourth quarter of 2024. Demand for goods and services improved as steady sales were recorded during the fourth quarter 2024. Supply chain challenges improved during the year, creating less constrained inventories, and cost increases appear to be leveling off. Consumer spending has increased slightly. Reported unemployment levels in December 2024 ranged from 2.9% to 4.6% in the four primary counties served by the Company. These levels increased from the December 2023 unemployment range of 2.1% to 3.3%. Labor demand remained solid as competition for workers has put upward pressure on labor costs. The local housing market shows continued strength with low inventory levels. Residential mortgage activity, including home equity and construction loans have increased steadily with stable interest rates and resolution of uncertainty after the election as the main factors increasing demand. Nonresidential construction activity has also improved since the prior year. Core deposits decreased slightly, as customers continue to move funds into higher yielding interest-bearing accounts. Commercial loan demand, including commercial real estate, increased slightly during 2024, while other consumer loan demand softened.
Certain risks are involved in providing loans, including, but not limited to, the borrowers’ ability and willingness to repay the debt. Before the Bank extends a new loan or renews an existing loan to a customer, these risks are assessed through a review of the borrower’s past and current credit history, the collateral being used to secure the transaction, if any, and other factors. For all commercial loan relationships greater than $500,000, the Bank’s internal credit department performs an annual risk rating review. In addition to this review, an independent, outside loan review firm is engaged to review a sample of watch list and adversely classified credits over $500,000 and a sample of commercial loan relationships greater than $1,000,000. The outside loan review also assesses management’s current credit grades and provides commentary with regard to assigned ratings, as well as assesses management’s specific loan loss reserves for loans included in their sample that are considered to be impaired. In addition, any loan over $100,000 identified as a problem credit by management and/or the external loan review consultants is assigned to the Bank’s “loan watch list,” has a written action plan created specifically for the loan relationship and is subject to ongoing review at least quarterly by the Bank’s credit department and the assigned loan officer to ensure appropriate action is taken if deterioration continues. These "watch list action plans" are reviewed with the Executive Committee of the Board quarterly.
Commercial loan rates are variable and fixed and include operating lines of credit and term loans made to businesses, primarily based on their ability to repay the loan from the cash flow of the business. Business assets such as equipment, accounts receivable, and inventory typically secure such loans. When the borrower is not an individual, the Bank generally obtains the personal guarantee of the business owner. These loans typically involve larger loan balances, are generally dependent on the cash flow of the business, and thus may be subject to a greater extent to adverse conditions in the general economy or in a specific industry. Management reviews the borrower’s cash flows when deciding whether to grant the credit in order to evaluate whether estimated future cash flows will be adequate to service principal and interest of the new obligation in addition to existing obligations.
Commercial real estate loans are primarily secured by borrower-occupied business real estate and are dependent on the ability of the related business to generate adequate cash flow to service the debt. Commercial real estate loans are generally originated with a loan-to-value ratio of 80% of the lower of cost or appraised value. Commercial construction loans are secured by commercial real estate and in most cases the Bank also provides the permanent financing. The Bank monitors advances and the maximum loan to value ratio is typically limited to the lesser of 80% of cost or appraised value. Management performs much of the same analysis when deciding whether to grant a commercial real estate loan as when deciding whether to grant a commercial loan.
Residential real estate loans carry both fixed and variable rates and are secured by the borrower’s residence. Such loans are made based on the borrower’s ability to make repayment from employment and other income. Management assesses the borrower’s ability and willingness to repay the debt through review of credit history and ratings, verification of employment and other income, review of debt-to-income ratios, and other measures of repayment ability. The Bank generally makes these loans in amounts of 80% or less of the value of the collateral or up to 95% of collateral value with private mortgage insurance. An appraisal from a qualified real estate appraiser or an evaluation based on comparable market values is obtained for substantially all loans secured by real estate. Residential construction loans are secured by residential real estate that generally will be occupied by the borrower upon completion. The Bank usually makes the permanent loan at the end of the construction phase. Generally, construction loans are made in amounts of 80% or less of the value of the as-completed collateral.
Home equity lines of credit are made to individuals and are secured by second or first mortgages on the borrower’s residence. Loans are based on similar credit and appraisal criteria used for residential real estate loans; however, loans up to 90% of the value of the property may be approved for borrowers with excellent credit histories. These loans typically bear interest at variable rates and require minimum monthly payments of the accrued interest.
Installment loans to individuals include unsecured loans and loans secured by recreational vehicles (“RVs”), automobiles, and other consumer assets. Consumer loans for the purchase of new RV’s and new automobiles generally do not exceed 125% of Dealer Invoice on RV’s or 110% of the Manufacturer’s Suggested Retail Price (MSRP) of an automobile. Loans for used RV’s and automobiles do not exceed 120% of the “clean trade-in value” as reported in the current “J.D. Power” used guides. Overdraft protection loans are unsecured personal lines of credit to individuals who have demonstrated good credit character with reasonably assured sources of income and satisfactory credit histories. Consumer loans generally involve more risk than residential mortgage loans because of the type and nature of collateral and, in certain types of consumer loans, absence of collateral. Since these loans are generally repaid from ordinary income of the individual or family unit, repayment may be adversely affected by job loss, divorce, ill health, or by a general decline in economic conditions. The Bank assesses the borrower’s ability and willingness to repay through a review of credit history, credit ratings, debt-to-income ratios, and other measures of repayment ability.
While CSB’s chief decision-makers monitor the revenue streams of the various financial products and services, operations are managed, and financial performance is evaluated, on a Company-wide basis. Accordingly, all of the Company’s banking operations are considered by management to be aggregated in one reportable operating segment. For a discussion of the Company’s financial performance for the fiscal year ended December 31, 2024, see the Consolidated Financial Statements and Notes to the Consolidated Financial Statements found in Item 8 of this Annual Report on Form 10-K.
Employees
On December 31, 2024, the Company had 181 employees, 156 of which were employed on a full-time basis. CSB has no separate employees not also employed by the Bank. No employees are covered by collective bargaining agreements. Employees are provided benefit programs, some of which are contributory. Management considers its employee relations to be good.
Competition
The financial services industry is highly competitive. In its primary market area of Holmes, Stark, Tuscarawas, Wayne and surrounding Ohio counties, the Bank competes for new deposit dollars and loans with other commercial banks, including both large regional banks and smaller community banks, as well as savings and loan associations, credit unions, finance companies, insurance companies, brokerage firms, investment companies, private lenders, and technology-based providers of financial services (sometimes referred to as “fintech” companies).
Competition within the financial service industry continues to increase as a result of mergers between, and expansion of, financial service providers within and outside of the Company’s primary market areas. In addition, securities firms and insurance companies that have elected to become financial holding companies may acquire commercial banks and other financial institutions, which can create additional competitive pressure.
Management believes the primary factors in competing for loans and deposits are interest rates, availability of services, quality of customer service, convenience, and name recognition. Some of the Company’s competitors may have greater resources and as such, higher lending limits, or fewer regulatory constraints and lower cost structures, all of which may adversely affect the Company’s ability to compete.
Investor Relations
The Company’s website address is www.csb1.com. The Company makes available its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, free of charge on its website as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (the “SEC”). The Company also makes available through its website, other reports filed with the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including its proxy statements and reports filed by officers and directors under Section 16(a) of the Exchange Act, as well as the Company’s Code of Ethics. References to our website in this Annual Report on Form 10-K are provided as a convenience and do not constitute, and should not be deemed, an incorporation by reference of the information contained on, or available through, the website, and such information should not be considered part of this Annual Report on Form 10-K.
In addition, the Company’s filings are available on the SEC’s website at www.sec.gov free of charge as soon as reasonably practicable after the Company has filed the above referenced reports.
Supervision and Regulation of CSB and the Bank
CSB and the Bank are subject to extensive regulation by federal and state regulatory agencies. The regulation of financial holding companies and their subsidiaries by bank regulatory agencies is intended primarily for the protection of consumers, depositors, borrowers, the deposit insurance fund of the FDIC (the “DIF”), and the banking system as a whole and not for the protection of shareholders.
CSB is a bank holding company that has registered with the Federal Reserve Board (“FRB”) as a financial holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). Pursuant to the Gramm-Leach-Bliley Act of 1999 (“GLBA”), a qualifying bank holding company may elect to become a financial holding company and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature and not otherwise permissible for a bank holding company, if: (i) the holding company is "well managed" and "well capitalized" and (ii) each of its subsidiary banks (a) is well capitalized under the Federal Deposit Insurance Corporation Act of 1991 prompt corrective action provisions, (b) is well managed, and (c) has at least a "satisfactory" rating under the Community Reinvestment Act (the “CRA”). CSB has been a financial holding company since 2005. No regulatory approval is required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the FRB. The financial holding company and its subsidiaries must continue to meet the above-described requirements in order to continue to engage in activities that are financial in nature without being subjected to regulatory action or restriction, which could include divestiture of the subsidiary or subsidiaries.
GLBA defines “financial in nature” to include securities underwriting, dealing, and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking; and activities that the FRB has determined to be closely related to banking. CSB is also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended, the Exchange Act, and the regulations rules and regulations promulgated thereunder, as administered by the SEC.
The Bank, as an Ohio state-chartered bank and member of the Federal Reserve System, is subject to regulation, supervision, and examination by the Ohio Division of Financial Institutions and the FRB. Because the FDIC insures its deposits, the Bank is also subject to certain FDIC regulations. The FDIC is an independent federal agency which insures the deposits, up to prescribed statutory limits, of federally insured banks and savings associations, and safeguards the safety and soundness of the financial institution industry. The Bank’s deposits are insured up to applicable limits by the DIF, and the Bank is subject to deposit insurance assessments to maintain the DIF. In addition, the Bank is subject to regulations promulgated by the Consumer Financial Protection Bureau (the “CFPB”), which was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as amended (the “Dodd-Frank Act”).
The earnings, dividends, and other aspects of the operations and activities of CSB and the Bank are affected by state and federal laws and regulations, and by policies of various regulatory authorities. These policies include, for example, statutory maximum lending rates, requirements on maintenance of reserves against deposits, domestic monetary policies of the FRB, United States fiscal and economic policies, international currency regulations and monetary policies, certain restrictions on relationships with many phases of the securities business, and capital adequacy and liquidity restraints.
The following information describes selected federal and state statutory and regulatory provisions that have, or could have, a material impact on the Company’s business. This discussion is qualified in its entirety by reference to the full text of the particular statutory or regulatory provisions contained or referenced herein.
Regulation of Bank Holding Companies
As a financial holding company, CSB’s activities are subject to regulation by the FRB. CSB is subject to regular examinations by the FRB and is required to file reports and such additional information as the FRB may require. The FRB has extensive enforcement authority over bank holding companies, including the ability to assess civil money penalties, issue cease and desist orders, and require that a bank holding company divest subsidiaries (including subsidiary banks). The FRB may initiate enforcement actions for violations of laws and regulations, and for unsafe and unsound practices. Under FRB policies, a bank holding company is expected to act as a “source of strength” to its subsidiary banks and to commit resources to support those subsidiary banks. Under this policy, the FRB may require a bank holding company to contribute additional capital to an undercapitalized subsidiary bank.
The BHC Act requires the prior approval of the FRB in cases where a bank holding company proposes to acquire direct or indirect ownership or control of more than 5% of the voting shares of any bank that is not already majority-owned by it, acquire all or substantially all of the assets of another bank or another financial or bank holding company, or merge or consolidate with any other financial or bank holding company.
Economic Growth, Regulatory Relief and Consumer Protection Act
On May 25, 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (the “Regulatory Relief Act”) was signed into law. The Regulatory Relief Act repealed or modified certain provisions of the Dodd-Frank Act and eased regulations on all but the largest banks (those with consolidated assets in excess of $250 billion). Bank holding companies with consolidated assets of less than $100 billion, including CSB, are no longer subject to enhanced prudential standards. The Regulatory Relief Act also relieves bank holding companies and banks with consolidated assets of less than $100 billion, including CSB, from certain record-keeping, reporting and disclosure requirements. Certain other regulatory requirements applied only to banks with assets in excess of $50 billion and so did not apply to CSB even before the enactment of the Regulatory Relief Act.
Current Expected Credit Loss Model
In December 2019, the federal banking agencies issued a final rule to address regulatory treatment of credit loss allowances under the current expected credit loss ("CECL”) models. The rule revised the federal banking agencies’ regulatory capital rules to identify which credit loss allowances under the CECL model are eligible for inclusion in regulatory capital and to provide banking organizations the option to phase in over three years the day-one adverse effects on regulatory capital that may result from the adoption of the CECL model. Concurrent with the enactment of the Coronavirus Aid, Relief, and Economic Security Act of 2020, as amended, federal banking agencies issued an interim final rule that delayed the estimated impact on regulatory capital resulting from the adoption of CECL. The interim final rule provided banking organizations that implemented CECL prior to the end of 2020 the option to delay for two years the estimated impact of CECL on regulatory capital relative to regulatory capital determined under the prior incurred loss methodology, followed by a three-year transition period to phase out the aggregate amount of capital benefit provided during the initial two-year delay. On August 26, 2020, the federal banking agencies issued a final rule that made certain technical changes to the interim final rule, including expanding the pool of eligible institutions. The Bank adopted the CECL model January 1, 2023, since it is a smaller reporting company.
Regulatory Capital
The FRB adopted risk-based capital guidelines for bank holding companies and state member banks, designed to absorb losses. The guidelines provide a systematic analytical framework, which makes regulatory capital requirements sensitive to differences in risk profiles among banking organizations, takes off-balance sheet exposures expressly into account in evaluating capital adequacy and incentivizes holding liquid, low-risk assets. Capital levels as measured by these standards are also used to categorize financial institutions for purposes of certain Prompt Corrective Action regulatory provisions.
In July 2013, the United States banking regulators issued new capital rules applicable to smaller banking organizations which also implement certain of the provisions of the Dodd-Frank Act (the “Basel III Capital Rules”). Community banking organizations, including CSB, began transitioning to the new rules on January 1, 2015. The new minimum capital requirements became effective on January 1, 2015; while a new capital conservation buffer and deductions from common equity capital phased in from January 1, 2016 through January 1, 2019, and most deductions from common equity tier 1 capital phased in from January 1, 2015 through January 1, 2019.
The Basel III Capital Rules include (i) a minimum common equity tier 1 capital ratio of 4.5%, (ii) a minimum tier 1 capital ratio of 6.0%, (iii) a minimum total capital ratio of 8.0%, and (iv) a minimum leverage ratio of 4.0%. Common equity for the common equity tier 1 capital ratio includes common stock (plus related surplus) and retained earnings, plus limited amounts of minority interests in the form of common stock, less the majority of certain regulatory deductions.
Tier 1 capital includes common equity as defined for the common equity tier 1 capital ratio, plus certain non-cumulative preferred stock and related surplus, cumulative preferred stock and related surplus, and trust preferred securities that have been grandfathered (but which are not permitted going forward), and limited amounts of minority interests in the form of additional tier 1 capital instruments, less certain deductions.
Tier 2 capital, which can be included in the total capital ratio, includes certain capital instruments (such as subordinated debt) and limited amounts of the allowance for loan and lease losses, subject to new eligibility criteria, less applicable deductions.
The deductions from common equity tier 1 capital include goodwill and other intangibles, certain deferred tax assets, mortgage-servicing assets above certain levels, gains on sale in connection with a securitization, investments in a banking organization’s own capital instruments, and investments in the capital of unconsolidated financial institutions (above certain levels).
Under the guidelines, capital is compared to the relative risk related to the balance sheet. To derive the risk included in the balance sheet, one of several risk weights is applied to different balance sheet and off-balance sheet assets, primarily based on the relative credit risk of the counterparty. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
The Basel III Capital Rules place restrictions on the payment of capital distributions, including dividends, and certain discretionary bonus payments to executive officers in the event the Company does not hold a capital conservation buffer of greater than 2.5% composed of common equity tier 1 capital above its minimum risk-based capital requirements, or if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% at the beginning of the quarter. Pursuant to the FRB’s Small Bank Holding Company Policy statement (“SBHC Policy”), as amended in September 2018, a bank holding company with assets of less than $3 billion and meeting certain other requirements is not required to comply with the consolidated capital requirements until such company exceeds $3 billion in assets or is otherwise determined by the FRB not to qualify as a small bank holding company. On December 31, 2023, CSB was deemed to be a small bank holding company under the SBHC Policy and was not required to comply with the FRB’s regulatory capital requirements. The Bank, however, must comply with the new capital requirements.
The implementation of the Basel III Capital Rules did not have a material impact on CSB’s or the Bank’s capital ratios.
Prompt Corrective Action
The federal banking agencies have established a system of “prompt corrective action” to resolve certain of the problems of undercapitalized institutions. This system is based on five capital level categories for insured depository institutions: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized”, and “critically undercapitalized.”
The federal banking agencies may (or in some cases must) take certain supervisory actions depending upon a bank’s capital level. For example, the banking agencies must appoint a receiver or conservator for a bank within 90 days after it becomes “critically undercapitalized” unless the bank’s primary regulator determines, with the concurrence of the FDIC, that other action would better achieve regulatory purposes. Banking operations otherwise may be significantly affected depending on a bank’s capital category. For example, a bank that is not “well capitalized” generally is prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market, and the holding company of any undercapitalized depository institution must guarantee, in part, specific aspects of the bank’s capital plan for the plan to be acceptable.
In order to be “well-capitalized,” a bank must have a minimum common equity tier 1 capital ratio of 6.5%, a total risk-based capital ratio of at least 10.0%, a tier 1 risk-based capital ratio of at least 8.0%, and a leverage ratio of at least 5.0%, and the bank must not be subject to any written agreement, order, capital directive, or prompt corrective action directive to meet and maintain a specific capital level for any capital measure.
As of December 31, 2023, the Bank met the ratio requirements in effect at that date to be deemed “well-capitalized.” See Note 12 - Regulatory Matters of the Notes to Consolidated Financial Statements, located in Item 8 Financial Statements and Supplementary Data of this 10-K.
Deposit Insurance
Substantially all of the deposits of the Bank are insured up to applicable limits by the DIF, and the Bank is assessed quarterly deposit insurance premiums to maintain the DIF. Insurance premiums for each insured institution are determined based upon the institution’s capital level and supervisory rating provided to the FDIC by the institution’s primary federal regulator and other information deemed by the FDIC to be relevant to the risk posed to the DIF by the institution. The assessment rate is then applied to the amount of the institution’s assessment base to determine the institution’s insurance premium. The deposit insurance assessment base is calculated on average assets less average tangible equity.
The FDIC assesses a quarterly deposit insurance premium on each insured institution based on risk characteristics of the insured institution and may also impose special assessments in emergency situations. The premiums fund the DIF. Pursuant to the Dodd-Frank Act, the FDIC has established reserve ratios. On June 30, 2019, the reserve ratios were met and the FDIC applied credits for banks with assets of less than $10 billion ("small bank credits") beginning September 30, 2019 through the June 2020 premium payment. The FDIC rules further changed the method of determining risk-based assessment rates for established banks with less than $10 billion in assets to better ensure that banks taking on greater risks pay more for deposit insurance than banks that take on less risk. As of June 30, 2020, the FDIC’s designated reserve ratio (“DRR”) fell below the statutory minimum DRR of 1.35%, to 1.30%. As a result, the FDIC adopted a restoration plan requiring the restoration of the DRR to 1.35% within eight years (September 30, 2028). The FDIC rules further changed the method of determining risk-based assessment rates for established banks with less than $10 billion in assets to better ensure that banks taking on greater risks pay more for deposit insurance than banks that take on less risk. In the FDIC’s most recent semiannual update for the Amended Restoration Plan in November 2023, the FDIC noted that increased loss provisions associated with the failures of Silicon Valley Bank, Signature Bank and First Republic Bank in 2023 that reduced the DIF balance, coupled with strong growth in insured deposits, resulted in the reserve ratio declining 15 basis points from 1.25% as of December 31, 2022 to 1.10% as of June 30, 2023. Despite the decline in the reserve ratio, the FDIC staff projected that the reserve ratio remains on track to reach the statutory minimum of 1.35% ahead of the deadline of September 30, 2028. As a result, the FDIC staff recommended no changes to the Amended Restoration Plan and all scheduled assessment rates were maintained.
On November 16, 2023, the FDIC adopted a final rule implementing a special assessment to recover the loss to the DIF arising from the protection of uninsured depositors following the failures of Silicon Valley Bank and Signature Bank. The assessment base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits reported for the quarter ended December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured deposits. The FDIC will collect the special assessment at an annual rate of approximately 13.4 basis points, over eight quarterly assessment periods, beginning with the first quarter of 2024. Because the Bank’s uninsured deposits were less than $5 billion for the quarter ended December 31, 2022, the Bank will not be subject to this special assessment.
As insurer, the FDIC is authorized to conduct examinations of, and to require reporting by, federally insured institutions. It also may prohibit any federally insured institution from engaging in any activity the FDIC determines by regulation or order to pose a serious threat to the DIF. The FDIC also has the authority to take enforcement actions against insured institutions. Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged or is engaging in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order, or condition imposed by the FDIC or written agreement entered into with the FDIC.
The management of the Bank does not know of any practice, condition, or violation that might lead to termination of deposit insurance.
Limits on Dividends and Other Payments
There are various legal limitations on the extent to which subsidiary banks may finance or otherwise supply funds to their parent holding company. Under applicable federal and state laws, a subsidiary bank may not, subject to certain limited exceptions, make loans or extensions of credit to, or investments in the securities of, its parent holding company. Subsidiary banks are also subject to collateral security requirements for any loan or extension of credit permitted by such exceptions.
Payments of dividends by the Bank are limited by applicable state and federal laws and regulations. The ability of CSB to obtain funds for the payment of dividends and for other cash requirements is largely dependent on the amount of dividends that may be declared by the Bank. However, the FRB expects CSB to serve as a source of strength for the Bank and may require CSB to retain capital for further investment in the Bank, rather than pay dividends to CSB shareholders. Payment of dividends by the Bank may be restricted at any time at the discretion of its applicable regulatory authorities if they deem such dividends to constitute an unsafe or unsound banking practice. These provisions could have the effect of limiting CSB’s ability to pay dividends on its common shares.
FRB policy requires CSB to provide notice to the FRB in advance of the payment of a dividend to CSB’s shareholders under certain circumstances and states that insured banks and bank holding companies should generally only pay dividends out of current operating earnings. Additionally, the Ohio Revised Code restricts the amount a Bank can dividend if the total amount of all dividends, including the proposed dividend, declared by the Bank in any calendar year exceeds the total of its retained net income of that year to date, combined with its retained net income of the two preceding years, unless the dividend is approved by the Ohio Division of Financial Institutions.
Consumer Protection Laws and Regulations
Banks are subject to regular examination to ensure compliance with federal statutes and regulations applicable to their business, including consumer protection statutes and implementing regulations. The Dodd-Frank Act established the CFPB, which has extensive regulatory and enforcement powers over consumer financial products and services. The CFPB has adopted numerous rules with respect to consumer protection laws, amending some existing regulations and adopting new ones, and has commenced enforcement actions against various parties. The following are just some of the consumer protection laws applicable to the Bank:
•Equal Credit Opportunity Act: prohibits discrimination in any credit transaction on the basis of any of various criteria.
•Truth in Lending Act: requires that credit terms are disclosed in a manner that permits a consumer to understand and compare credit terms more readily and knowledgeably.
•Fair Housing Act: makes it unlawful for a lender to discriminate in its housing-related lending activities against any person on the basis of any of certain criteria.
•Home Mortgage Disclosure Act: requires financial institutions to collect data that enables regulatory agencies to determine whether the financial institutions are serving the housing credit needs of the communities in which they are located.
•Real Estate Settlement Procedures Act: requires that lenders provide borrowers with disclosures regarding the nature and cost of real estate settlements and prohibits abusive practices that increase borrowers’ costs.
•Privacy provisions of the Gramm-Leach-Bliley Act: requires financial institutions to establish policies and procedures to restrict the sharing of non-public customer data with non-affiliated parties and to protect customer information from unauthorized access.
The banking regulators also use their authority under the Federal Trade Commission Act to take supervisory or enforcement action with respect to unfair or deceptive acts or practices by banks that may not necessarily fall within the scope of specific banking or consumer finance law.
Community Reinvestment Act
CRA requires depository institutions to assist in meeting the credit needs of their market areas, including low- and moderate-income areas, consistent with safe and sound banking practice. Under this Act, each institution is required to adopt a statement for each of its market areas describing the depository institution’s efforts to assist in its community’s credit needs. Depository institutions are periodically examined for compliance and assigned one of four ratings: outstanding, satisfactory, needs improvement, or substantial noncompliance. The rating assigned to a financial institution is considered in connection with various applications submitted by a financial institution or its holding company to its banking regulators, including applications to acquire another financial institution or to open a new branch office. In addition, all subsidiary banks of a financial holding company must maintain a satisfactory or outstanding rating in order for the financial holding company to avoid limitations on its activities. The Bank received a rating of “outstanding" in its most recent CRA examination.
On October 24, 2023, the federal banking agencies, including the Federal Reserve Board, issued a final rule designed to strengthen and modernize the regulations implementing the CRA. The changes are designed to encourage banks to expand access to credit, investment and banking services in low- and moderate-income communities, adapt to changes in the banking industry, including mobile and internet banking, provide greater clarity and consistency in the application of the CRA regulations, and tailor CRA evaluations and data collection to bank size and type. The applicability date for the majority of the changes to the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027. CSB cannot predict the impact the changes to the CRA will have on its operations at this time.
Customer Privacy
Under the GLBA, federal banking agencies have adopted rules that limit the ability of banks and other financial institutions to disclose non-public information about consumers to nonaffiliated third parties. These limitations require distribution of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to nonaffiliated third parties.
USA Patriot Act
The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended (the “Patriot Act”), and related regulations require regulated financial institutions to establish a program specifying procedures for obtaining identifying information from customers seeking to open new accounts and establish enhanced due diligence policies, procedures and controls designed to detect and report suspicious activity.
The Anti-Money Laundering Act of 2020 (the “AMLA”), which amends the Bank Secrecy Act of 1970 (the “BSA”), was enacted in January 2021. The AMLA is intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws. Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; expands enforcement-related and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower initiatives and protections.
The Bank has established policies and procedures to be compliant with the requirements of the Patriot Act and the AMLA.
Office of Foreign Assets Control Regulation
The United States Treasury Department’s Office of Foreign Assets Control (“OFAC”) administers and enforces economic and trade sanctions against targeted foreign countries and regimes, under authority of various laws, including designated foreign countries, nationals and others. OFAC publishes lists of specially designated targets and countries. CSB is responsible for, among other things, blocking accounts of, and transactions with, such targets and countries, prohibiting unlicensed trade and financial transactions with them and reporting blocked transactions after their occurrence. Failure to comply with these sanctions could have serious financial, legal and reputational consequences, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required. Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these obligations.
Cybersecurity
In March 2015, federal regulators issued two related statements regarding cybersecurity. One statement indicates that financial institutions should design multiple layers of security controls to establish several lines of defense and to ensure that their risk management processes also address the risk posed by compromised customer credentials, including security measures to reliably authenticate customers accessing Internet-based services of the financial institution. The other statement indicates that a financial institution’s management is expected to maintain sufficient business continuity planning processes to ensure the rapid recovery, resumption, and maintenance of the financial institution’s operations after a cyber-attack involving destructive malware. A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the financial institution or its critical service providers fall victim to this type of cyber-attack. If CSB fails to observe the regulatory guidance, it could be subject to various regulatory sanctions, including financial penalties.
In February 2018, the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents. These SEC guidelines, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations.
In November 2021, federal banking agencies issued a final rule that became effective in May 2022 requiring banking organizations that experience a cybersecurity incident to notify certain entities. A cybersecurity incident occurs when actual or potential harm to the confidentiality, integrity, or availability of information or an information system occurs, or there is a violation or imminent threat of a violation to banking security policies and procedures. The affected bank must notify its respective federal regulator of the cybersecurity incident as soon as possible and no later than 36 hours after the bank determines a cybersecurity incident that rises to the level of a notification incident has occurred. These notifications are intended to promote early awareness of threats to banking organizations and will help banks react to those threats before they manifest into larger incidents. This rule also requires bank service providers to notify their bank organization customers of a cybersecurity incident that has caused, or is reasonably likely to cause, a material service disruption or degradation for four or more hours.
Furthermore, once final rules are adopted, the Cyber Incident Reporting for Critical Infrastructure Act, enacted in March 2022, will require certain covered entities to report a covered cyber incident to the U.S. Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (“CISA”) within 72 hours after it reasonably believes an incident has occurred. Separate reporting to CISA will also be required within 24 hours, if a ransom payment is made as a result of a ransomware attack.
On July 26, 2023, the SEC adopted final rules that require public companies to promptly disclose material cybersecurity incidents in a Current Report on Form 8-K and detailed information regarding their cybersecurity risk management, strategy, and governance on an annual basis in an Annual Report on Form 10-K. Companies are required to report on Form 8-K any cybersecurity incident they determine to be material within four business days of making that determination. See Item 1C “Cybersecurity” in Part I of this Form 10-K. These SEC rules, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations.
State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements. Many states have also recently implemented or modified their data breach notification and data privacy requirements. CSB expects this trend of state-level activity in those areas to continue and is continually monitoring developments in the states in which our customers are located.
Effect of Environmental Regulation
Compliance with federal, state, and local provisions regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had a material effect upon the capital expenditures, earnings, or competitive position of CSB or its subsidiaries. CSB believes the nature of the operations of its subsidiaries has little, if any, environmental impact. CSB, therefore, anticipates no material capital expenditures for environmental control facilities for its current fiscal year or for the foreseeable future.
CSB believes its primary exposure to environmental risk is through the lending activities of the Bank. In cases where management believes environmental risk potentially exists, the Bank mitigates environmental risk exposure by requiring environmental site assessments at the time of loan origination to confirm collateral quality as to commercial real estate parcels posing higher than normal potential for environmental impact, as determined by reference to present and past uses of the subject property and adjacent sites.
Executive and Incentive Compensation
Following the adoption of additional listing requirements in 2023 to comply with the Dodd-Frank Act and rules adopted by the SEC in October 2022, public companies listed on the NYSE or Nasdaq are now required to adopt and implement “clawback” procedures policies for incentive compensation payments and to disclose the details of the procedures, which allow recovery of incentive compensation that was paid on the basis of erroneous financial information necessitating an accounting restatement due to material noncompliance with financial reporting requirements. This clawback policy is intended to apply to compensation paid within the three completed fiscal years immediately preceding the date the issuer is required to prepare a restatement a three-year look-back window of the restatement and would cover all executives (including former executives) who received incentive awards. CSB adopted a clawback policy effective December 1, 2023, though it is not required to do so.
Future Legislation
Various and significant legislation affecting financial institutions and the financial industry is from time to time adopted by the U.S. Congress and state legislatures, and regulatory agencies frequently adopt or amend regulations. Such legislation and regulation may continue to change banking laws and regulations and the operating environment of CSB and its subsidiaries in substantial and unpredictable ways and could significantly increase or decrease costs of doing business, limit or expand permissible activities, or affect the competitive balance among financial institutions. The nature and extent of future legislative and regulatory changes affecting financial institutions remains very unpredictable.
Statistical Disclosures
The following schedules present, for the periods indicated, certain financial and statistical information of the Company as required under the SEC’s “Subpart 1400 of regulation S-K”, as amended on September 11, 2020, or a specific reference as to the location of required disclosures in Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) or Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Distribution of Assets, Liabilities, and Stockholders’ Equity; Interest Rates and Interest Differential
The information set forth under the heading, “Average Balance Sheets and Net Interest Margin Analysis” located in the MD&A is incorporated by reference herein.
The information set forth under the heading, “Rate/Volume Analysis of Changes in Income and Expense” located in the MD&A is incorporated by reference herein.
Investment Portfolio
The following is a schedule of maturities for each category of debt securities and the related weighted average yield of such securities as of December 31, 2024:
One Year or Less
After One Year
Through Five
Years
Maturing
After Five Years
Through Ten
Years
After Ten Years
Total
(Dollars in thousands)
Amortized
Cost
Yield
Amortized
Cost
Yield
Amortized
Cost
Yield
Amortized
Cost
Yield
Amortized
Cost
Yield
Available-for-sale:
U.S. Treasuries
$
13,487
2.98
%
$
-
-
%
$
-
-
%
$
-
-
%
$
13,487
2.98
%
U.S. Government agencies
3,000
0.55
3,000
0.74
-
-
-
-
6,000
0.65
Mortgage-backed securities of
government agencies
3.23
2.58
2,925
1.37
66,562
2.72
69,746
2.66
Asset-backed securities of
government agencies
-
-
-
-
5.88
-
-
5.88
State and political subdivisions
2,493
2.46
5,521
2.85
7,037
1.61
-
-
15,051
2.21
Corporate bonds
11,190
3.24
12,403
2.76
6,455
3.69
-
-
30,048
3.14
Total
$
30,196
2.79
%
$
21,157
2.49
%
$
16,821
2.47
%
$
66,562
2.72
%
$
134,736
2.67
%
Held-to-maturity:
U.S. Treasuries
$
2,484
1.02
%
$
2,487
1.19
%
$
2,883
1.15
%
$
-
-
%
$
7,854
1.12
%
Mortgage-backed securities of
government agencies
-
-
-
-
1.87
193,814
2.00
193,937
2.00
State and political subdivisions
-
-
1.70
1,700
2.74
-
-
2,518
2.40
Total
$
2,484
1.02
%
$
3,305
1.32
%
$
4,706
1.74
%
$
193,814
2.00
%
$
204,309
1.97
%
The weighted average yields are calculated using amortized cost of investments and are based on coupon rates for securities purchased at par value, and on effective interest rates considering amortization or accretion if securities were purchased at a premium or discount. The weighted average yield on tax-exempt obligations is presented on a tax-equivalent basis using the Company’s marginal federal income tax rate of 21%.
Loan Portfolio
The following is a schedule of maturities of loans based on contract terms and assuming no amortization or prepayments, as of December 31, 2024:
Maturing
(Dollars in thousands)
One Year
or Less
One
Through
Five Years
Five Through Fifteen Years
After Fifteen
Years
Total
Commercial and industrial
$
59,414
$
49,792
$
31,149
$
4,021
$
144,376
Commercial real estate
2,948
15,719
34,663
137,184
190,514
Commercial lessors of buildings
5,650
27,664
67,432
101,168
Construction
1,417
3,525
10,949
48,371
64,262
Consumer mortgage
2,254
34,522
140,801
177,578
Home equity line of credit
2,191
11,047
31,733
-
44,971
Consumer installment
7,083
1,935
9,645
Consumer indirect
4,919
-
5,276
Total
$
66,959
$
95,420
$
177,534
$
397,877
$
737,790
The following is a schedule of fixed rate and variable rate loans due after one year from December 31, 2024.
(Dollars in thousands)
Fixed Rate
Variable Rate
Commercial and industrial
$
49,969
$
34,993
Commercial real estate
1,178
186,388
Commercial lessors of buildings
99,969
Construction
1,327
61,518
Consumer mortgage
38,944
138,633
Home equity line of credit
42,711
Consumer installment
8,396
Consumer indirect
5,269
-
Total
$
105,929
$
564,902
Summary of Credit Loss Experience
The following schedule presents an analysis of net charge-offs (recoveries) to average loans, and related ratios for the years ended:
December 31, 2024
(Dollars in thousands)
Net (Charge-offs) Recoveries
Average Loans
Net (Charge-offs) Recoveries as a % of Average Loans
Net (Charge-offs) Recoveries
Average Loans
Net (Charge-offs) Recoveries as a % of Average Loans
Commercial and industrial
$
(5,597
)
$
144,306
-3.88
%
$
$
141,811
0.13
%
Commercial real estate
(597
)
192,555
-0.31
%
175,699
0.01
%
Commercial lessors of buildings
-
94,553
0.00
%
-
82,690
0.00
%
Construction
-
55,766
0.00
%
-
45,779
0.00
%
Consumer mortgage
171,475
0.01
%
161,275
0.00
%
Home equity line of credit
-
44,373
0.00
%
-
42,838
0.00
%
Consumer installment
(48
)
10,378
-0.46
%
(26
)
10,444
-0.25
%
Consumer indirect
(24
)
5,622
-0.43
%
(35
)
6,257
-0.56
%
Total
$
(6,256
)
$
719,028
-0.87
%
$
$
666,793
0.02
%
The following schedule is a breakdown of the allowance for credit losses allocated by type of loan and related ratios. While management’s periodic analysis of the adequacy of the allowance for credit losses may allocate portions of the allowance for specific problem-loan situations, the entire allowance is available for any loan charge-offs that occur.
Allocation of the Allowance for Credit Losses
(Dollars in thousands)
Allowance
Amount
Percentage
of Loans
in Each
Category
to Total
Loans
Allowance
Amount
Percentage
of Loans
in Each
Category
to Total
Loans
December 31, 2024
December 31, 2023
Commercial and industrial
$
2,919
%
$
1,737
%
Commercial real estate
1,681
1,637
Commercial lessors of buildings
1,141
1,200
Construction
Consumer mortgage
1,107
Home equity line of credit
Consumer installment
Consumer indirect
Total
$
7,595
%
$
6,607
%
Deposits
The following is a schedule of average deposit amounts and average rates paid on each category for the periods indicated:
Average Amounts Outstanding
Year ended December 31,
Average Rate Paid
Year ended December 31,
(Dollars in thousands)
Noninterest-bearing demand
$
281,675
$
314,956
N/A
N/A
Interest-bearing demand
227,842
251,626
0.90
%
1.02
%
Savings deposits
302,621
296,896
1.07
0.80
Time deposits
223,421
154,505
4.08
2.96
Total deposits
$
1,035,559
$
1,017,983
The Bank does not have any material deposits by foreign depositors. The total uninsured portion of all deposit accounts greater than $250 thousand was $244 million as of December 31, 2024, and $254 million as of December 31, 2023. The following is a schedule of maturities of time certificates of deposit in amounts greater than $250 thousand as of December 31, 2024:
(Dollars in thousands)
Time Deposits Greater than $250 Thousand
Three months or less
$
41,363
Over three through six months
20,472
Over six through twelve months
12,335
Over twelve months
5,464
Total
$
79,634

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS.
Not Applicable.

---

ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.

---

ITEM 2. PROPERTIES
ITEM 2. PROPERTIES.
The Bank operates sixteen banking centers, and a loan production office that was opened in Medina, Ohio as noted below:
Location
Address
Owned
Leased
Walnut Creek
4980 Old Pump Street, Walnut Creek, Ohio 44687
X
Winesburg
2225 U.S. 62, Winesburg, Ohio 44690
X
Sugarcreek
127 South Broadway, Sugarcreek, Ohio 44681
X
Charm
4440 C.R. 70, Charm, Ohio 44617
X
Clinton Commons
2102 Glen Drive, Millersburg, Ohio 44654
X
Berlin
4587 S.R. 39 Suite B, Berlin, Ohio 44610
X
South Clay
91 South Clay Street, Millersburg, Ohio 44654
X
Shreve
333 West South Street, Shreve, Ohio 44676
X
Orrville
119 West High Street, Orrville, Ohio 44667
X
Gnadenhutten
100 South Walnut Street, Gnadenhutten, Ohio 44629
X
New Philadelphia
635 West High Avenue, New Philadelphia, Ohio 44663
X
North Canton
600 South Main Street, North Canton, Ohio 44720
X
Bolivar
11113 Fairoaks Road NE, Bolivar, Ohio 44612
X
Wooster
350 East Liberty Street, Wooster, Ohio 44691
X
Wooster
3562 Commerce Parkway, Wooster, Ohio 44691
X
Medina
23 Public Square, Suite 200, Medina, Ohio 44256
X
Operations Center
91 North Clay Street, Millersburg, Ohio 44654
X
The Bank considers its physical properties to be in good operating condition and suitable for the purposes for which they are being used. All properties owned by the Bank are unencumbered by any mortgage or security interest and in management’s opinion, are adequately insured.

---

ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS.
In the normal course of business, CSB is subject to pending and threatened legal actions, including claims for which material relief or damages are sought. Although CSB is not able to predict the outcome of such actions, after reviewing pending and threatened actions, management believes that the outcome of any or all such actions will not have a material adverse effect on the results of operations, the financial position, or shareholders’ equity of CSB. Further, there are no material legal proceedings in which any director, executive officer, principal shareholder, or affiliate of CSB is a party or has a material interest that is adverse to CSB or the Bank.

---

ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II

---

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’ S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Information contained in the section captioned “Common Stock and Shareholder Information” included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference.
PERFORMANCE GRAPH
The following graph compares the yearly stock change, and the cumulative total shareholder return on CSB’s Common Shares during the five-year period ended December 31, 2024, with the cumulative total return on the Standard and Poor’s 500 Stock Index and the NASDAQ Community Bank Stock Index. The comparison assumes $100 was invested on December 31, 2019, in CSB’s Common Shares and in each of the indicated indices and assumes reinvestment of dividends.
CSBB
$
$
$
$
$
$
S & P 500 Total Return
NASDAQ Community Bank Total Return
ISSUER PURCHASES OF EQUITY SECURITIES
Period
Total Number of Shares Purchased
Average Price Paid Per Share
Total number of Shares Purchased as Part of Publicly Announced Plans
Maximum Number of Shares that May Yet be Purchased Under the Plan
October 1, 2024 to October 31, 2024
4,879
$
37.36
4,879
49,213
November 1, 2024 to November 30, 2024
38.52
48,283
December 1, 2024 to December 31, 2024
3,426
38.39
3,426
44,857
On March 2, 2021, CSB filed a Current Report on Form 8-K with the SEC announcing that its Board of Directors approved a Stock Repurchase Program authorizing the repurchase of up to 5% of CSB’s common shares. Repurchases may be made periodically as market and business conditions warrant, in the open market, through block purchases and in negotiated private transactions. The Stock Repurchase Program has no scheduled expiration date. CSB repurchased 19,849 Common Shares during 2024 and 37,638 Common Shares during 2023.

---

ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. [RESERVED]

---

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
2024 FINANCIAL REVIEW
INTRODUCTION
CSB Bancorp, Inc. (the “Company” or “CSB”) was incorporated under the laws of the State of Ohio in 1991 and is a registered financial holding company. The Company’s wholly owned subsidiaries are The Commercial and Savings Bank (the “Bank”) and CSB Investment Services, LLC. The Bank is chartered under the laws of the State of Ohio and was organized in 1879. The Bank is a member of the Federal Reserve System, with deposits insured by the Federal Deposit Insurance Corporation, and its primary regulators are the Ohio Division of Financial Institutions and the Federal Reserve Board.
The Company, through the Bank, provides retail and commercial banking services to its customers including checking and savings accounts, time deposits, cash management, safe deposit facilities, commercial loans, real estate mortgage loans, consumer loans, IRAs, night depository facilities, and trust and brokerage services. Its customers are located primarily in Holmes, Stark, Tuscarawas, Wayne, and portions of surrounding counties in Ohio.
Economic activity in the Company’s market area grew modestly in the fourth quarter of 2024. Demand for goods and services increased moderately as steady sales were recorded during the fourth quarter of 2024. Reported unemployment levels in December 2024 ranged from 2.9% to 4.6% in the four primary counties served by the Company. These levels increased from the December 2023 range of 2.1% to 3.3%. Labor demand remained solid as competition for workers with specialized skills has put upward pressure on labor costs. The local housing market continues to be strong with low inventory levels. Residential construction activity has increased modestly with stable interest rates and resolution of uncertainty after the election as the main factors increasing demand. Nonresidential construction activity has also improved since the prior year. Core deposits decreased slightly, and customers continue to move funds into higher yielding interest-bearing accounts.
FORWARD-LOOKING STATEMENTS
Certain statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations are not related to historical results but are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties. Any forward-looking statements made by the Company herein and in future reports and statements are not guarantees of future performance. Actual results may differ materially from those in forward-looking statements because of various risk factors as discussed in this annual report. The Company does not undertake, and specifically disclaims, any obligation to publicly release the result of any revisions to any forward-looking statements to reflect the occurrence of unanticipated events or circumstances after the date of such statements.
NON-U.S. GAAP FINANCIAL MEASURES
Management’s Discussion and Analysis of Financial Condition and Results of Operations contains non-U.S. generally accepted accounting principles ("GAAP") financial measures where management believes it to be helpful in understanding CSB’s results of operations or financial position. Where non-U.S. GAAP financial measures are used, the comparable U.S. GAAP financial measure, as well as the reconciliation to the comparable U.S. GAAP financial measure, can be found herein.
FINANCIAL DATA
The following table set forth certain selected consolidated financial information:
(Dollars in thousands, except per share data)
Statements of income:
Total interest income
$
51,601
$
46,016
$
34,819
$
29,529
$
31,066
Total interest expense
14,748
9,875
2,496
2,012
2,913
Net interest income
36,853
36,141
32,323
27,517
28,153
Provision (recovery) for credit loss expense
7,031
(895
)
(655
)
1,650
Net interest income after provision (recovery) for credit loss expense
29,822
35,699
33,218
28,172
26,503
Noninterest income
7,102
6,744
6,711
7,325
6,935
Noninterest expense
24,589
24,060
23,393
22,093
20,342
Income before income taxes
12,335
18,383
16,536
13,404
13,096
Income tax provision
2,323
3,627
3,223
2,567
2,528
Net income
$
10,012
$
14,756
$
13,313
$
10,837
$
10,568
Per share of common stock:
Basic earnings per share
$
3.76
$
5.51
$
4.91
$
3.97
$
3.85
Diluted earnings per share
3.76
5.51
4.91
3.97
3.85
Dividends
1.58
1.50
1.30
1.22
1.13
Book value
43.33
40.43
35.43
35.80
34.23
Average basic common shares outstanding
2,661,308
2,679,902
2,714,045
2,733,126
2,742,350
Average diluted common shares outstanding
2,661,308
2,679,902
2,714,045
2,733,126
2,742,350
Year-end balances:
Loans, net
$
730,046
$
694,797
$
620,333
$
541,536
$
600,885
Securities
331,529
368,153
401,144
311,245
204,184
Total assets
1,191,500
1,178,689
1,159,108
1,144,239
1,031,632
Deposits
1,044,887
1,027,427
1,023,417
1,002,747
891,562
Borrowings
26,949
37,597
35,011
39,937
41,879
Shareholders’ equity
114,835
107,939
95,920
97,315
93,859
Average balances:
Loans, net
$
710,963
$
660,266
$
580,454
$
554,547
$
601,419
Securities
351,731
385,666
388,827
231,285
129,508
Total assets
1,181,417
1,158,286
1,151,925
1,111,808
931,330
Deposits
1,035,559
1,017,983
1,012,629
969,009
788,904
Borrowings
28,709
34,525
40,218
42,600
48,358
Shareholders’ equity
111,722
100,452
94,850
96,145
90,247
Select ratios:
Net interest margin, FTE basis1
3.31
%
3.32
%
2.98
%
2.63
%
3.22
%
Return on average total assets
0.85
1.27
1.16
0.97
1.13
Return on average shareholders’ equity
8.96
14.69
14.04
11.27
11.71
Average shareholders’ equity as a percent of average total assets
9.46
8.67
8.23
8.65
9.69
Net loan charge-offs (recoveries) as a percent of average loans
0.87
(0.02
)
(0.02
)
0.00
0.06
Allowance for credit losses on loans as a percent of loans at year-end
1.03
0.94
1.09
1.39
1.36
Shareholders’ equity as a percent of total year-end assets
9.64
9.16
8.28
8.50
9.10
Dividend payout ratio2
42.02
27.20
26.48
30.73
29.35
1 Net interest margin is shown on a fully taxable equivalent, ("FTE") basis, (non-GAAP).
2 Dividend payout ratio is calculated as dividends declared as a percentage of net income.
RESULTS OF OPERATIONS
Net Income
CSB’s 2024 net income was $10.0 million compared to $14.8 million for 2023, a decrease of 32%. Total revenue, net interest income plus noninterest income, increased $1.1 million, or 2.5%, over the prior year to a total of $44 million. The provision for credit losses increased to $7.0 million as compared to $442 thousand for the prior year. Noninterest expense increased $529 thousand, or 2% and the provision for income tax decreased $1.3 million over the prior year due to a decrease in taxable income. Basic and diluted earnings per share were $3.76, down 32% from the prior year. The return on average assets was 0.85% in 2024 compared to 1.27% in 2023 and return on average equity was 8.96% in 2024 compared to 14.69% in 2023.
Net Interest Income
(Dollars in thousands)
Net interest income
$
36,853
$
36,141
Taxable equivalent
Net interest income, FTE1
$
36,996
$
36,274
Net interest margin
3.30
%
3.31
%
Taxable equivalent adjustment
0.01
0.01
Net interest margin, FTE1
3.31
%
3.32
%
1 Taxable equivalent adjustments have been computed assuming a 21% tax rate in 2024, and 2023 (non-GAAP).
Net interest income is the largest source of the Company’s revenue and consists of the difference between interest income generated on earning assets and interest expense incurred on liabilities (deposits, short-term and long-term borrowings). Changes in volume, interest rates, composition of interest-earning assets, and interest-bearing liabilities affect net interest income. Net interest income increased $712 thousand, or 2%, in 2024 compared to 2023. The increase was a result of a $5.6 million increase in interest income, partially offset by an increase of $4.9 million in interest expense. The FTE net interest margin decreased to 3.31% from 3.32% in 2023.
Interest income increased $5.6 million, or 12%, in 2024 compared to 2023 primarily due to an increase of $5.8 million, or 16%, in interest and fees on loans from an increase in average balances of $52 million and an increase in yield of 42 basis points ("bps"). Interest income on taxable securities decreased $488 thousand due to a decrease in average balances of $31 million. Interest income on interest-earning deposits mainly held at the Federal Reserve increased $277 thousand in 2024 compared to 2023 primarily due to an increase in average balances of $5 million.
Interest expense increased $4.9 million, or 49%, in 2024 as compared to 2023 primarily due to shifts in volume from noninterest-bearing demand deposits and lower yielding interest-bearing demand deposits to higher yielding time deposits. Average noninterest-bearing demand and interest-bearing demand deposit balances decreased $57 million during the year and average time deposit balances increased $69 million, and the average interest rate paid on time deposits increased by 112 bps.
The following table provides detailed analysis of changes in average balances, yield, and net interest income:
AVERAGE BALANCE SHEETS AND NET INTEREST MARGIN ANALYSIS
(Dollars in thousands)
Average
Balance 1
Interest
Average
Rate 2
Average
Balance 1
Interest
Average
Rate 2
Interest-earning
assets
Interest-earning
deposits in other banks
$
46,309
$
2,405
5.19
%
$
40,723
$
2,107
5.17
%
Securities:
Taxable
332,849
7,315
2.20
363,988
7,803
2.14
Tax exempt 4
18,882
2.30
21,678
2.33
Loans 3, 4
719,028
41,589
5.78
666,793
35,733
5.36
Total interest-
earning assets
1,117,068
51,744
4.63
%
1,093,182
46,149
4.22
%
Noninterest-
earning assets
Cash and due
from banks
18,302
19,313
Bank premises
and equipment, net
13,565
13,189
Other assets
40,547
39,129
Allowance for credit losses on loans
(8,065
)
(6,527
)
Total assets
$
1,181,417
$
1,158,286
Interest-bearing
liabilities
Demand deposits
$
227,842
2,053
0.90
%
$
251,626
2,564
1.02
%
Savings deposits
302,621
3,242
1.07
296,896
2,362
0.80
Time deposits
223,421
9,109
4.08
154,505
4,573
2.96
Borrowed funds
28,709
1.20
34,525
1.09
Total interest-
bearing liabilities
782,593
14,748
1.88
%
737,552
9,875
1.34
%
Noninterest-bearing
liabilities and
shareholders’
equity
Demand deposits
281,675
314,956
Other liabilities
5,427
5,326
Shareholders’ equity
111,722
100,452
Total liabilities
and equity
$
1,181,417
$
1,158,286
Net interest
income 4
36,996
36,274
FTE adjustment
(143
)
(133
)
GAAP net interest
income
$
36,853
$
36,141
Net interest margin
FTE
3.31
%
3.32
%
Net interest spread
2.75
%
2.88
%
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 (non-GAAP), reconciled to the GAAP amount at the bottom of the table.
The following table compares the impact of changes in average rates and average volumes on net interest income:
RATE/VOLUME ANALYSIS OF CHANGES IN INCOME AND EXPENSE1
2024 v. 2023
Net Increase
(Dollars in thousands)
(Decrease)
Volume
Rate
Increase (decrease) in interest income:
Federal Funds
$
$
$
-
Interest-earning deposits in other banks
(11
)
Securities:
Taxable
(488
)
(685
)
Tax exempt 2
(71
)
(65
)
(6
)
Loans 2
5,856
3,021
2,835
Total interest income change 2
5,595
2,580
3,015
Increase (decrease) in interest expense:
Demand deposits
(511
)
(214
)
(297
)
Savings deposits
Time deposits
4,536
2,810
1,726
Borrowed funds
(32
)
(69
)
Total interest expense change
4,873
2,588
2,285
Net interest income change 2
$
$
(8
)
$
1 Changes attributable to both volume and rate, which cannot be segregated, have been allocated based on the absolute value of the change due to volume and the change due to rate.
2 Interest income is shown on a fully tax-equivalent basis (non-GAAP).
Provision (Recovery) for Credit Losses on Loans and Off-Balance Sheet Commitments
The provision for credit losses on loans is determined by management as the amount required to bring the allowance for credit losses to a level considered appropriate to absorb an estimation of credit loss during the expected weighted average life of the loan. During 2024, a provision for credit loss expense on loans of $7.2 million was recognized compared to a provision of $198 thousand in 2023. A recovery for credit loss expense on off-balance sheet commitments of $213 thousand was recognized in 2024 as compared to a provision for credit loss expense for off-balance sheet commitments of $244 thousand in 2023. Nonperforming loans increased $1.3 million from 2023 to 2024. See Financial Condition - Allowance for Credit Losses for additional discussion and information relative to the provision for credit losses.
Noninterest Income
YEARS ENDED DECEMBER 31
Change from 2023
(Dollars in thousands)
Amount
%
Service charges on deposit accounts
$
1,156
$
(53
)
(4
)
%
$
1,209
Trust services
1,219
1,013
Debit card interchange fees
2,115
-
2,107
Credit card fees
(58
)
(8
)
Gain on sale of loans, including MSRs
Earnings on bank-owned life insurance
Unrealized gain on equity securities
(7
)
(47
)
Other
Total noninterest income
$
7,102
$
%
$
6,744
Noninterest income increased $358 thousand, or 5%, in 2024 compared to the same period in 2023. Trust services revenue increased $206 thousand with asset market value increases. Gain on sales of mortgage loans, including mortgage servicing rights ("MSRs") increased $120 thousand, as $9 million in loans were sold into the secondary market compared to $5 million in 2023. Earnings on bank owned life insurance increased $112 thousand, with the purchase of an additional $2 million of insurance. Credit card interchange income decreased $58 thousand due to an overall decline in volume. Service charges on deposit accounts decreased $53 thousand, as increases in monthly deposit account service charges were offset by decreases in non-sufficient funds ("NSF") charges.
Noninterest Expenses
YEARS ENDED DECEMBER 31
Change from 2023
(Dollars in thousands)
Amount
%
Salaries and employee benefits
$
13,623
$
(50
)
-
%
$
13,673
Occupancy expense
1,172
1,138
Equipment expense
Professional and director fees
1,565
1,471
Ohio financial institutions tax
Marketing and public relations
Software expense
1,709
1,651
Debit card expense
FDIC insurance
Other
2,939
2,823
Total noninterest expenses
$
24,589
$
%
$
24,060
Noninterest expense increased $529 thousand, or 2%, in 2024 compared to 2023. Salaries and employee benefits decreased $50 thousand as increases in base salaries were offset by decreases in employee profit sharing and incentive compensation. Ohio financial institutions tax expense increased $97 thousand, which is based on the increase in shareholders' equity. Professional and director fees increased $94 thousand, primarily from increases in legal expenses related to loan collection efforts. Other expenses increased $116 thousand, or 4%.
Income Taxes
The provision for income taxes amounted to $2.3 million in 2024 as compared to $3.6 million in 2023. The decrease in 2024 resulted from lower taxable income. The corporate statutory tax rate was 21% for 2024 and 2023. The effective tax rate in 2024 and 2023 was 18.8% and 19.7%, respectively.
FINANCIAL CONDITION
Total assets of the Company were $1.2 billion on December 31, 2024 and 2023, representing an increase of $13 million, or 1%. Net loans increased $35 million, or 5%, while investment securities decreased $37 million, or 10%, and total cash and cash equivalents increased $9 million, or 15%. Deposits increased $17 million and short-term borrowings decreased $10 million, while other borrowings from the Federal Home Loan Bank (“FHLB”) decreased by $488 thousand.
Securities
Total investment securities decreased $37 million, or 10%, to $332 million at year-end 2024, primarily related to principal repayments on mortgage-backed securities. CSB’s portfolio is primarily comprised of agency mortgage-backed securities, obligations of state and political subdivisions, U.S. Treasury notes, other government agencies’ debt, and corporate bonds. Restricted securities consist primarily of FHLB stock.
The Company has no exposure to government-sponsored enterprise preferred stocks, collateralized debt obligations, or trust preferred securities. The Company’s municipal bond portfolio consists of tax-exempt general obligation and revenue bonds. As of December 31, 2024, 99% of such bonds held an S&P or Moody’s investment grade rating, and 1% were non-rated local issues. The municipal portfolio includes a broad spectrum of counties, cities, universities, and school districts with 77% of the portfolio originating in Ohio, and 23% in Pennsylvania. Gross unrealized security losses within the portfolio were 12% of total securities on December 31, 2024, reflecting interest rate increases, not credit downgrades.
One of the primary functions of the securities portfolio is to provide a source of liquidity and it is structured such that maturities and cash flows provide a portion of the Company’s liquidity needs and asset/liability management requirements.
Loans
Total loans increased $36 million, or 5%, during 2024. Volume increases were recognized as follows: commercial real estate buildings held for investment and leased to others increased $18 million, or 22%, construction loans increased $15 million, or 31%, residential real estate loans increased $11 million, or 6%, and home equity lines of credit increased $2 million, or 4%. Commercial and industrial loans decreased $8 million, or 5% during 2024, and consumer installment loans, including consumer indirect loans, also decreased $2 million, or 10%. At year-end 2024, commercial real estate is comprised mostly of owner occupied buildings of $191 million, and $101 million of buildings held for investment and leased to others. Owner occupied buildings are mostly light industrial, warehouse buildings and auto repair. Investment properties include healthcare buildings, retail strip centers, and residential investment properties.
The Company originated $58 million and $52 million of residential mortgage loans held in the portfolio, including residential construction, conventional 1-4 family, and equity line loans, which were predominately variable rate, in 2024 and 2023, respectively. The increase in interest rates slowed consumer demand for 1-4 family fixed-rate thirty-year residential mortgages which are sold into the secondary market, thus limiting the Company's mortgage sales to $9 million in 2024 and $5 million in 2023. Home equity loan balances increased $2 million during 2024 with demand improving as interest rates declined during the second half of the year.
Management anticipates modest economic growth in the Company’s local service areas will continue to improve. Commercial and commercial real estate loans, in aggregate, comprise approximately 59% and 61% of the total loan portfolio at year-end 2024 and 2023, respectively. Residential real estate loans approximated 30% of the portfolio in 2024 and 2023. Construction and land development loans increased from 7% to 9% of the portfolio. The Company is well within the respective regulatory guidelines for investment in construction, development, and investment property loans that are not owner occupied. The Company has very little exposure to commercial office space leased properties. See Note 3 - Loans for further discussion on Concentrations of Credit. Most of the Company’s lending activity is with customers primarily located within Holmes, Medina, Stark, Tuscarawas and Wayne counties in Ohio.
Nonperforming Assets, Individually Evaluated Loans, and Loans Past Due 90 Days or More
Nonperforming assets consist of nonaccrual loans, loans past due 90 days and still accruing, and other real estate acquired through or in lieu of foreclosure. Loans are placed on nonaccrual status when they become past due 90 days or more, or when mortgage loans are past due as to principal and interest 120 days or more, unless they are both well secured and in the process of collection.
NONPERFORMING ASSETS
DECEMBER 31
(Dollars in thousands)
Nonaccrual loans
Commercial and industrial
$
$
Commercial real estate
Commercial lessors of buildings
Construction
-
-
Consumer mortgage
Home equity line of credit
-
Consumer installment
Consumer indirect
Loans past due 90 days or more and still accruing
-
Total nonperforming loans
1,705
Other real estate owned
-
-
Other repossessed assets
-
Total nonperforming assets
$
1,719
$
Nonaccrual loans to total loans
0.17
%
0.06
%
Allowance for Credit Losses
The allowance for credit losses ("ACL") is maintained at a level considered by management to be adequate to cover credit losses currently expected over the weighted average life of the loan pools. The ACL increased by $1 million, or 15%, to $7.6 million on December 31, 2024, from $6.6 million on December 31, 2023. The additional ACL was primarily the result of the increase in the historical loss rate applied to the commercial and industrial loan portfolio as well as the increase in the average life of the loans. The Bank continues to maintain qualitative factors tied to changes in: the lending policy, economic conditions, lending credit management, delinquent and classified loans, and the value of collateral.
During 2024, $381 thousand in nonaccrual loans were collected, $5.9 million were charged-off, and $7.1 million new loans entered nonaccrual status.
ALLOWANCE FOR CREDIT LOSSES
FOR THE YEAR ENDED
(Dollars in thousands)
Net charge-offs (recoveries) as a percentage of average total loans
0.87
%
(0.02
)
%
Allowance for credit losses as a percentage of total loans
1.03
0.94
Allowance for credit losses to total nonaccrual loans
6.23
x
16.67
x
Components of the allowance for credit losses:
General reserves
$
7,595
$
6,546
Specific reserve allocations
-
Total allowance for credit losses
$
7,595
$
6,607
The ACL on loans totaled $7.6 million, or 1.03% of total loans at year-end 2024 as compared to $6.6 million, or 0.94%, of total loans at year-end 2023. The Bank had net credit losses of $6.3 million in 2024, compared to $130 thousand in recoveries in 2023. As previously disclosed during 2024, court liquidation continues on a $7 million commercial relationship that has been charged down by $6 million. Related to this loan, approximately $900 thousand remains in nonperforming assets with $400 thousand in auction proceeds held by the receiver and $500 thousand in commercial real estate (office building) remaining to be liquidated.
The Company maintains an internal watch list for loans where management’s analysis of the borrower’s operating results and financial condition indicates the borrower’s cash flows are inadequate to meet its debt service requirements and for loans where there exists an increased risk that a shortfall may occur. See the Credit Quality Indicators section of Note 3 to the Consolidated Financial Statements for additional information. Nonperforming loans, which consist of loans past due 90 days or more and nonaccrual loans, aggregated $1.7 million, or 0.23%, of loans at year-end 2024 compared to $396 thousand, or 0.06%, of loans at year-end 2023.
Other Assets
Net premises and equipment increased $1 million to $14 million at year-end 2024 with $2 million in capitalized purchases and $1 million in depreciation expense. Total bank-owned life insurance increased from $25 million at year-end 2023 to $28 million at year-end 2024, including a $2 million purchase of insurance and increasing cash surrender values. There was no other real estate owned on December 31, 2024 or 2023. The Company recognized a net deferred tax asset of $2.3 million on December 31, 2024, compared to a net deferred tax asset of $2.6 million on December 31, 2023. The decrease is primarily due to an improvement in the net unrealized loss on securities.
Deposits
The Company’s deposits are obtained primarily from individuals and businesses located in its market area. For deposits, the Company must compete with products offered by other financial institutions, as well as alternative investment options. Time deposits and money market savings account balances increased for the year ended 2024. Market rates on deposits and cash management products increased during the first half of the year before beginning to decrease in the second half of the year.
December 31
Change from 2023
(Dollars in thousands)
Amount
%
Noninterest-bearing demand
$
281,358
$
301,697
$
(20,339
)
(7
)
%
Interest-bearing demand
218,866
256,621
(37,755
)
(15
)
Traditional savings
161,354
165,265
(3,911
)
(2
)
Money market savings
140,056
112,264
27,792
Time deposits in excess of $250,000
80,384
58,597
21,787
Other time deposits
162,869
132,983
29,886
Total deposits
$
1,044,887
$
1,027,427
$
17,460
1.7
%
Other Funding Sources
The Company obtains additional funds through securities sold under repurchase agreements, overnight borrowings from the FHLB or other financial institutions, and advances from the FHLB. Short-term borrowings, consisting of securities sold under repurchase agreements, decreased $10 million. Other borrowings, consisting of FHLB advances, decreased $488 thousand as the result of principal repayments. The majority of FHLB borrowings on December 31, 2024, have long term maturities with monthly amortizing payments.
CAPITAL RESOURCES
Total shareholders’ equity was $114.8 million at December 31, 2024, compared to $107.9 million on December 31, 2023. This increase was primarily due to net income of $10.0 million and a $1.9 million decrease in the accumulated other comprehensive loss recognized on the available-for-sale securities portfolio, resulting from investment payment and maturities as well as decreasing interest rates. Dividends were paid of $4.2 million and $762 thousand of common shares were repurchased in 2024. The Board of Directors approved a Stock Repurchase Program on February 26, 2021, allowing the repurchase of up to 5% of the Company’s then-outstanding common shares. Repurchased shares are to be held as treasury stock and are available for general corporate purposes. On December 31, 2024, approximately 45 thousand shares could still be repurchased under the current authorized program. Shares repurchased during 2024 totaled 19,849 shares for $762 thousand and shares purchased in 2023 totaled 37,638 shares for $1.4 million.
Effective January 1, 2015, the Federal Reserve adopted final rules implementing Basel III and regulatory capital changes required by the Dodd-Frank Act. The rules apply to both the Company and the Bank. The rules established minimum risk-based and leverage capital requirements for all banking organizations. The rules include: (a) a common equity tier 1 capital ratio of at least 4.5%, (b) a tier 1 capital ratio of at least 6.0%, (c) a minimum total capital ratio of at least 8.0%, and (d) a minimum leverage ratio of 4%. Under the guidelines, capital is compared to the relative risk related to the balance sheet. To derive the risk included in the balance sheet, one of several risk weights is applied to different balance sheet and off-balance sheet assets primarily based on the relative credit risk of the counterparty. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The rules also place restrictions on the payment of capital distributions, including dividends, and certain discretionary bonus payments to executive officers if the Company does not hold a capital conservation buffer of greater than 2.5% composed of common equity tier 1 capital above its minimum risk-based capital requirements. The Company and Bank’s actual and required capital amounts are disclosed in Note 12 to the Consolidated Financial Statements.
Dividends paid by the Bank to CSB are the primary source of funds available to the Company for payment of dividends to shareholders and for other working capital needs. The payment of dividends by the Bank to the Company is subject to restrictions by regulatory authorities, which generally limit dividends to current year net income and the prior two (2) year's net retained earnings, as defined by regulation. In addition, dividend payments generally cannot reduce regulatory capital levels below the minimum regulatory guidelines discussed above.
LIQUIDITY
December 31
(Dollars in thousands)
Change
from 2023
Cash and cash equivalents
$
73,509
$
64,077
$
9,432
Unused lines of credit
126,334
128,198
(1,864
)
Unpledged AFS securities at fair market value
123,155
127,387
(4,232
)
$
322,998
$
319,662
$
3,336
Net deposits and short-term liabilities
$
1,068,413
$
1,051,156
$
17,257
Liquidity ratio
30.2
%
30.4
%
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 CSB’s Asset Liability Committee. The Company was within all Board-approved limits on December 31, 2024, and 2023. Additional sources of liquidity include net income, loan repayments, the availability of borrowings, and adjustments of interest rates to attract deposit accounts.
As summarized in the Consolidated Statements of Cash Flows, the most significant investing activities for the Company in 2024 included net loan originations of $42 million and securities purchases of $15 million, offset by maturities and repayment of securities totaling $54 million. The Company’s financing activities included a $17 million increase in deposits, $10 million decrease in short-term borrowings, and $4 million in cash dividends paid.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The most significant market risk the Company is exposed to is interest rate risk. The business of the Company and the composition of its balance sheet consist of investments in interest-earning assets (primarily loans and securities), which are funded by interest-bearing liabilities (deposits and borrowings). These financial instruments have varying levels of sensitivity to changes in the market rates of interest, resulting in market risk. None of the Company’s financial instruments are held for trading purposes.
The Board of Directors establishes policies and operating limits with respect to interest rate risk. The Company manages interest rate risk regularly through its Asset Liability Committee. The Committee meets periodically to review various asset and liability management information including, but not limited to, the Company’s liquidity position, projected sources and uses of funds, interest rate risk position, and economic conditions.
Interest rate risk is monitored primarily through the use of an earnings simulation model. The model is highly dependent on various assumptions, which change regularly as the balance sheet and market interest rates change. The earnings simulation model projects change in net interest income resulting from the effect of changes in interest rates. The analysis is performed quarterly over a twenty-four-month horizon. The analysis includes two (2) balance sheet models, one based on a static balance sheet and one on a dynamic balance sheet with projected growth in assets and liabilities. This analysis is performed by estimating the expected cash flows of the Company’s financial instruments using interest rates in effect at year-end 2024 and 2023. Interest rate risk policy limits are tested by measuring the anticipated change in net interest income over a two-year period. The tests assume quarterly ramped increases and decreases in market interest rates over twenty-four month horizons, as compared to a stable rate environment or base model. The following table reflects the change to net interest income using a dynamic balance sheet for the first twelve-month periods of the twenty-four month horizon.
Net Interest Income at Risk
December 31, 2024
Change In
Interest Rates
(Basis Points)
Net
Interest
Income
Dollar
Change
Percentage
Change
Board
Policy
Limits
(Dollars in thousands)
+ 400
$
42,231
$
1,333
3.3
%
± 25
%
+ 300
41,902
1,004
2.5
± 15
+ 200
41,571
1.6
± 10
+ 100
41,237
0.8
± 5
40,898
-
-
- 100
40,432
(466
)
(1.1
)
± 5
- 200
40,089
(809
)
(2.0
)
± 10
- 300
39,553
(1,345
)
(3.3
)
± 15
- 400
38,988
(1,910
)
(4.7
)
± 25
December 31, 2023
+ 400
$
39,184
$
(266
)
(0.7
)
%
± 25
%
+ 300
39,264
(186
)
(0.5
)
± 15
+ 200
39,340
(110
)
(0.3
)
± 10
+ 100
39,394
(56
)
(0.1
)
± 5
39,450
-
-
- 100
39,201
(249
)
(0.6
)
± 5
- 200
38,951
(499
)
(1.3
)
± 10
- 300
38,718
(732
)
(1.9
)
± 15
- 400
38,494
(956
)
(2.4
)
± 25
Management reviews Net Interest Income at Risk with the Board on a periodic basis. The Company was within all Board-approved limits at December 31, 2024 and 2023 for the first twelve-month periods of the twenty-four month horizon.
Economic Value of Equity at Risk
December 31, 2024
Change In
Interest Rates
(Basis Points)
Percentage
Change
Board
Policy
Limits
+ 400
(5.4
)
%
± 35
%
+ 300
(3.6
)
± 30
+ 200
(2.0
)
± 20
+ 100
(0.7
)
± 15
- 100
(0.8
)
± 15
- 200
(2.8
)
± 20
- 300
(7.6
)
± 30
- 400
(15.9
)
± 35
December 31, 2023
+ 400
15.9
%
± 35
%
+ 300
12.8
± 30
+ 200
9.2
± 20
+ 100
4.9
± 15
- 100
(6.2
)
± 15
- 200
(13.2
)
± 20
- 300
(22.5
)
± 30
- 400
(36.5
)
± 35
The economic value of equity is calculated by subjecting the period-end balance sheet to changes in interest rates and measuring the impact of the changes on the values of the assets and liabilities. Hypothetical changes in interest rates are then applied to the financial instruments. The cash flows and fair values are again estimated using these hypothetical rates. For the net interest income estimates, the hypothetical rates are applied to the financial instruments based on the assumed cash flows.
Management periodically measures and reviews the economic value of equity at risk with the Board. As of December 31, 2024, the Company was within all policy limits set by the Board. As of December 31, 2023, the percentage change of the market value of equity was outside of the board policy limit in the -400 basis point scenario. The technical fail in the declining rate scenario in 2023 was caused by the duration of liabilities remaining high and loan and investment prepayment speeds increasing.
SIGNIFICANT ASSUMPTIONS AND OTHER CONSIDERATIONS
The above analysis is based on numerous assumptions, including relative levels of market interest rates, loan prepayments, and reactions of depositors to changes in interest rates and this should not be relied upon as being indicative of actual results. Further, the analysis does not contemplate all actions the Company may undertake in response to changes in interest rates.
U.S. Treasury securities, obligations of U.S. Government corporations and agencies, obligations of states and political subdivisions will generally repay at their stated maturity or if callable, prior to their final maturity date. Mortgage-backed security payments increase when interest rates are low and decrease when interest rates rise. Most of the Company’s loans permit the borrower to prepay the principal balance prior to maturity without penalty. The likelihood of prepayment depends on a number of factors: current interest rate and interest rate index (if any) on the loan, the financial ability of the borrower to refinance, the economic benefit to be obtained from refinancing, availability of refinancing at attractive terms, as well as economic conditions in specific geographic areas, which affect the sales and price levels of residential and commercial property. In a changing interest rate environment, prepayments may increase or decrease on fixed and adjustable-rate loans depending on the current relative levels and expectations of future short-term and long-term interest rates. Prepayments on adjustable-rate loans generally increase when long-term interest rates fall or are at historically low levels relative to short-term interest rates, thus making fixed rate loans more desirable. While savings and checking deposits generally may be withdrawn upon the customer’s request without prior notice, a continuing relationship with customers resulting in future deposits and withdrawals is generally predictable, leading to a dependable and uninterrupted source of funds. Time deposits generally have early withdrawal penalties, which discourage customer withdrawal prior to maturity. Short-term borrowings have fixed maturities. Certain advances from the FHLB carry prepayment penalties and are expected to be repaid in accordance with their contractual terms.
FAIR VALUE MEASUREMENTS
The Company discloses the estimated fair value of its financial instruments on December 31, 2024, and 2023 in Note 15 to the Consolidated Financial Statements.
OFF-BALANCE SHEET ARRANGEMENTS, CONTRACTUAL OBLIGATIONS, AND CONTINGENT LIABILITIES AND COMMITMENTS
The following table summarizes the Company’s loan commitments, including letters of credit, as of December 31, 2024:
Amount of Commitment to Expire Per Period
(Dollars in thousands) Type of Commitment
Total
Amount
Less than
1 year
1 to 3
Years
3 to 5
Years
Over 5
Years
Commercial lines of credit
$
136,929
$
112,382
$
20,156
$
4,166
$
Commercial real estate
12,712
9,317
3,290
-
Home equity line of credit
87,048
5,802
13,886
15,772
51,588
Construction
32,051
15,095
16,956
-
-
Consumer lines of credit
-
-
-
Credit card lines
8,489
8,489
-
-
-
Overdraft privilege
7,225
7,225
-
-
-
Letters of credit
3,979
3,701
-
-
Total commitments
$
289,069
$
162,647
$
54,566
$
20,043
$
51,813
All lines of credit represent either fee-paid or legally binding loan commitments for the loan categories noted. Letters of credit are also included in the amounts noted in the table since the Company requires each letter of credit be supported by a loan agreement. The commercial and consumer lines represent both unsecured and secured obligations. The home equity lines are secured by mortgages on residential property. It is anticipated that a significant portion of these lines will expire without being drawn upon.
The following table summarizes the Company’s other contractual obligations, exclusive of interest, as of December 31, 2024:
Payment Due by Period
(Dollars in thousands)
Contractual Obligations
Total
Amount
Less
than 1
year
1 to 3
Years
3 to 5
Years
Over 5
Years
Total time deposits
$
243,253
$
212,968
$
29,390
$
$
-
Short-term borrowings
25,683
25,683
-
-
-
Other borrowings
1,266
Operating leases
-
Total obligations
$
270,408
$
239,072
$
29,971
$
1,155
$
The other borrowings noted in the preceding table represent borrowings from the FHLB. The notes require payment of interest on a monthly basis with principal due in monthly installments. The obligations bear stated fixed interest rates and stipulate a prepayment penalty if the note’s interest rate exceeds the current market rate for similar borrowings at the time of repayment. As the notes mature, the Company evaluates the liquidity and interest rate circumstances at that time to determine whether to pay off or renew the note. The evaluation process typically includes: the strength of current and projected customer loan demand, the Company’s federal funds sold or purchased position, projected cash flows from maturing investment securities, the current and projected market interest rate environment, local and national economic conditions, and customer demand for the Company’s deposit product offerings.
CRITICAL ACCOUNTING ESTIMATES
The Company’s Consolidated Financial Statements are prepared in accordance with U.S. Generally Accepted Accounting Principles and follow general practices within the commercial banking industry. Application of these principles requires management to make estimates, assumptions, and judgments affecting the amounts reported in the financial statements. These estimates, assumptions, and judgments are based upon the information available as of the date of the financial statements.
The most significant accounting policies followed by the Company are presented in Note 1 to the Consolidated Financial Statements. These policies, along with the other disclosures presented in the Notes to Consolidated Financial Statements and the 2024 Financial Review, provide information about how significant assets and liabilities are valued in the financial statements and how those values are determined. Management has identified the allowance for credit losses and goodwill as the accounting areas requiring the most subjective and complex estimates, assumptions, and judgments, and as such, could be the most subject to revision as new information becomes available.
As previously noted in the section entitled Allowance for Credit Losses, management performs an analysis to assess the adequacy of its allowance for credit losses using the current expected credit loss (CECL) model. This analysis encompasses a variety of factors including: the potential loss exposure for individually reviewed loans, the historical loss experience, changes in delinquent and classified loans, any significant changes in lending or loan review staff, an evaluation of current and future economic conditions, any significant changes in the volume or mix of loans within each category, a review of the significant concentrations of credit, and any legal, competitive, or regulatory concerns. Potential future earnings volatility is driven by CECL's life of credit loss and economic forecasts of unemployment, recession and future credit loss within the portfolio. Under stress testing performed by the Bank in 2024, the unemployment forecast models as the largest driver of credit loss provision volatility. When sustained unemployment is significantly increased to 10% over a two-year period, an additional provision of approximately $1.4 million would be required under current model assumptions. While the weighted average life of the loan portfolio has extended to five years, at December 31, 2024, stressing the commercial real estate, lessors of buildings and residential mortgage portfolios' weighted average lives by 10%, or an increase of 6 months, resulted in a minimal increase of $124 thousand to the allowance for credit losses.
The Company accounts for business combinations using the acquisition method of accounting. Goodwill and intangible assets with indefinite useful lives are not amortized. Intangible assets with finite useful lives are amortized using accelerated methods over their estimated weighted-average useful lives, approximating ten years.
IMPACT OF INFLATION AND CHANGING PRICES
The Consolidated Financial Statements and related data presented herein have been prepared in accordance with U.S. Generally Accepted Accounting Principles, requiring measurement of financial position, and results of operations primarily in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation. Most assets and liabilities of the Company are monetary in nature. Therefore, interest rates have a more significant impact on the Company’s performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or magnitude as prices of goods and services. The liquidity, maturity structure, and quality of the Company’s assets and liabilities are critical to maintenance of acceptable performance levels.
COMMON STOCK AND SHAREHOLDER INFORMATION
Common shares of the Company are not traded on an established market. Shares are traded on the OTC market through broker/ dealers under the symbol “CSBB” and through private transactions. The table below represents the range of high and low prices paid for transactions known to the Company. Management does not have knowledge of prices paid on all transactions. Because of the lack of an established market, these prices may not reflect the prices at which stock would trade in an active market. These quotations reflect interdealer prices, without mark-up, mark-down, or commission and may not represent actual transactions. The table specifies cash dividends declared by the Company to its shareholders during 2024 and 2023. No assurances can be given that future dividends will be declared, or if declared, what the amount of any such dividends will be. Additional information concerning restrictions over the payment of dividends is included in Note 12 of the Consolidated Financial Statements.
Quarterly Common Stock Price and Dividend Data
Quarter Ended
High
Low
Dividends
Declared
Per Share
Dividends
Declared
March 31, 2024
$
40.90
$
35.46
$
0.39
$
1,039,337
June 30, 2024
41.00
37.17
0.39
1,039,227
September 30, 2024
40.00
37.00
0.40
1,063,810
December 31, 2024
39.50
36.02
0.40
1,061,406
March 31, 2023
$
42.80
$
36.00
$
0.36
$
965,025
June 30, 2023
40.75
35.32
0.38
1,018,524
September 30, 2023
39.13
35.05
0.38
1,015,099
December 31, 2023
40.85
36.18
0.38
1,014,577
As of December 31, 2024, the Company had 1,023 shareholders of record and 2,650,089 outstanding shares of common stock.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Information contained in the section captioned, “Quantitative and Qualitative Disclosures about Market Risk” located in the MD&A is incorporated by reference herein.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT ON MANAGEMENT’S ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of CSB Bancorp, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is designed to provide reasonable assurance that our published financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted the required assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024. Management’s assessment did not identify any material weaknesses in the Company’s internal control over financial reporting. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal Control-Integrated Framework. Based upon this assessment, management believes that the Company’s internal control over financial reporting is effective as of December 31, 2024.
Eddie L. Steiner
Paula J. Meiler
President,
Senior Vice President,
Chief Executive Officer
Chief Financial Officer
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of CSB Bancorp, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of CSB Bancorp, Inc. and subsidiaries (the “Company”) as of December 31, 2024 and 2023; the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the years then ended; and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent, with respect to the Company, in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Audit Committee and that: (1) relate to accounts or disclosures that are material to the financial statements; and (2) involve our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter, in any way, our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Allowance for Credit Losses (ACL) - Qualitative Adjustments
Description of the Matter
The Company’s loan portfolio totaled $738 million as of December 31, 2024, and the associated ACL was $7.6 million. As discussed in Notes 1 and 3 to the consolidated financial statements, determining the amount of the ACL requires significant judgment about the expected future losses, which is based on a baseline lifetime loss rate, calculated using a weighted-average remaining maturities method, which is then adjusted for current qualitative conditions and reasonable and supportable forecasts. Management applies these qualitative adjustments to the baseline lifetime loss rate to reflect changes in the current and forecasted environment, both internal and external, that are different from the conditions that existed during the historical loss calculation period.
We identified these qualitative adjustments within the ACL as critical audit matters because they involve a high degree of subjectivity. While the determination of these qualitative adjustments includes analysis of observable data over the historical loss period, the judgments required to assess the directionality and magnitude of adjustments is highly subjective. Auditing these complex judgments and assumptions involved especially challenging auditor judgment due to the nature of audit evidence and the nature and extent of effort required to address these matters.
How we addressed the matter in our audit
The primary procedures we performed to address this critical audit matter included:
•Testing the design, implementation, and operating effectiveness of internal controls over the calculation of the allowance for credit losses, including the qualitative factor adjustments.
•Testing the completeness and accuracy of the significant data points that management uses in their evaluation of the qualitative adjustments.
•Testing the anchoring calculation that management completes to properly align the magnitude of the adjustments with the Company's historical loss data.
•Evaluating the directional consistency and reasonableness of management's conclusions regarding basis points applied (whether positive or negative) based on the trends identified in the underlying data.
•Testing the mathematical accuracy of the application of the qualitative adjustments to the loan segments within the ACL calculation.
We have served as the Company’s auditor since 2005.
Cranberry Township, Pennsylvania
March 14, 2025
CONSOLIDATED BALANCE SHEETS
December 31, 2024 and 2023
(Dollars in thousands, except per share data)
ASSETS
Cash and cash equivalents
Cash and due from banks
$
21,287
$
24,463
Interest-earning deposits in other banks
52,222
39,614
Total cash and cash equivalents
73,509
64,077
Securities
Available-for-sale, at fair value
125,434
140,080
Held-to-maturity; fair value of $172,603 in 2024 and $194,730 in 2023 ($0 credit loss allowance for 2024 and 2023)
204,309
226,279
Equity securities
Restricted stock, at cost
1,520
1,535
Total securities
331,529
368,153
Loans held for sale
-
Loans
737,641
701,404
Less allowance for credit losses
7,595
6,607
Net loans
730,046
694,797
Premises and equipment, net
14,069
13,002
Goodwill
4,728
4,728
Bank owned life insurance
28,225
25,410
Accrued interest receivable and other assets
9,111
8,522
TOTAL ASSETS
$
1,191,500
$
1,178,689
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits
Noninterest-bearing
$
281,358
$
301,697
Interest-bearing
763,529
725,730
Total deposits
1,044,887
1,027,427
Short-term borrowings
25,683
35,843
Other borrowings
1,266
1,754
Allowance for credit losses on off-balance sheet commitments
Accrued interest payable and other liabilities
4,305
4,990
Total liabilities
1,076,665
1,070,750
SHAREHOLDERS’ EQUITY
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued
2,980,602 shares; and outstanding 2,650,089 shares in 2024 and 2,669,938 in 2023
18,629
18,629
Additional paid-in capital
9,815
9,815
Retained earnings
103,105
97,297
Treasury stock at cost: 330,513 shares in 2024, 310,664 shares in 2023
(8,294
)
(7,532
)
Accumulated other comprehensive loss
(8,420
)
(10,270
)
Total shareholders’ equity
114,835
107,939
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
1,191,500
$
1,178,689
These consolidated financial statements should be read in connection with the accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 2024 and 2023
(Dollars in thousands, except per share data)
INTEREST AND DIVIDEND INCOME
Loans, including fees
$
41,539
$
35,707
Taxable securities
7,315
7,803
Nontaxable securities
Other
2,405
2,107
Total interest and dividend income
51,601
46,016
INTEREST EXPENSE
Deposits
14,404
9,499
Short-term borrowings
Other borrowings
Total interest expense
14,748
9,875
NET INTEREST INCOME
36,853
36,141
CREDIT LOSS EXPENSE
Provision for credit loss expense - loans
7,244
Provision (recovery) for credit loss expense - off-balance sheet commitments
(213
)
Total provision for credit loss expense
7,031
NET INTEREST INCOME AFTER CREDIT LOSS EXPENSE
29,822
35,699
NONINTEREST INCOME
Service charges on deposit accounts
1,156
1,209
Trust services
1,219
1,013
Debit card interchange fees
2,115
2,107
Credit card fees
Gain on sale of loans, net
Earnings on bank owned life insurance
Unrealized gain on equity securities
Other income
Total noninterest income
7,102
6,744
NONINTEREST EXPENSES
Salaries and employee benefits
13,623
13,673
Occupancy expense
1,172
1,138
Equipment expense
Professional and director fees
1,565
1,471
Financial institutions tax
Marketing and public relations
Software expense
1,709
1,651
Debit card expense
FDIC insurance expense
Other expenses
2,939
2,823
Total noninterest expenses
24,589
24,060
INCOME BEFORE INCOME TAXES
12,335
18,383
Federal income tax provision
2,323
3,627
NET INCOME
$
10,012
$
14,756
Weighted average shares outstanding - basic and diluted
2,661,308
2,679,902
Earnings per share - basic and diluted
$
3.76
$
5.51
These consolidated financial statements should be read in connection with the accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31, 2024 and 2023
(Dollars in thousands)
Net income
$
10,012
$
14,756
Other comprehensive income
Unrealized gain on available-for-sale securities arising during the period
2,166
3,168
Amortization of held-to-maturity discount resulting from transfer
Income tax effect at 21%
(492
)
(706
)
Other comprehensive income
1,850
2,649
Total comprehensive income
$
11,862
$
17,405
These consolidated financial statements should be read in connection with the accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ EQUITY
Years Ended December 31, 2024 and 2023
(Dollars in thousands, except per share data)
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
BALANCE AT DECEMBER 31, 2022
$
18,629
$
9,815
$
86,502
$
(6,107
)
$
(12,919
)
$
95,920
Net income
-
-
14,756
-
-
14,756
Cumulative effect of adoption of ASU 2016-13
-
-
-
-
Other comprehensive income
-
-
-
-
2,649
2,649
Purchase of 37,638 treasury shares
-
-
-
(1,425
)
-
(1,425
)
Cash dividends declared, $1.50 per share
-
-
(4,013
)
-
-
(4,013
)
BALANCE AT DECEMBER 31, 2023
$
18,629
$
9,815
$
97,297
$
(7,532
)
$
(10,270
)
$
107,939
Net income
-
-
10,012
-
-
10,012
Other comprehensive income
-
-
-
-
1,850
1,850
Purchase of 19,849 treasury shares
-
-
-
(762
)
-
(762
)
Cash dividends declared, $1.58 per share
-
-
(4,204
)
-
-
(4,204
)
BALANCE AT DECEMBER 31, 2024
$
18,629
$
9,815
$
103,105
$
(8,294
)
$
(8,420
)
$
114,835
These consolidated financial statements should be read in connection with the accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2024 and 2023
(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
10,012
$
14,756
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of premises, equipment
and software
Deferred income tax expense
Provision for credit loss expense
7,244
Gain on sale of loans, net
(281
)
(161
)
Security amortization, net of accretion
Secondary market loan sale proceeds
9,023
4,891
Originations of secondary market loans held-for-sale
(9,113
)
(4,725
)
Earnings on bank-owned life insurance
(814
)
(702
)
Effects of changes in operating assets and liabilities:
Net deferred loan (fees) costs
(222
)
Accrued interest receivable
(105
)
(350
)
Accrued interest payable
Other assets and liabilities
(1,915
)
(715
)
Net cash provided by operating activities
$
15,665
$
15,625
CASH FLOWS FROM INVESTING ACTIVITIES
Securities:
Proceeds from repayments, available-for-sale
$
31,732
$
17,102
Proceeds from repayments, held-to-maturity
21,840
20,993
Purchases, available-for-sale
(15,290
)
(4,457
)
Redemption of restricted stock
1,895
Loan (originations) and payments, net
(42,271
)
(74,242
)
Purchases of premises and equipment
(1,960
)
(424
)
Purchases of software
(145
)
(2
)
Purchase of bank owned life insurance
(2,000
)
-
Sale of property
-
Net cash used in investing activities
$
(8,079
)
$
(39,126
)
These consolidated financial statements should be read in connection with the accompanying notes to the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended December 31, 2024 and 2023
(Dollars in thousands)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits
$
17,460
$
4,010
Net change in short-term borrowings
(10,160
)
3,293
Repayment of other borrowings
(488
)
(707
)
Cash dividends paid
(4,204
)
(4,013
)
Purchase of treasury stock
(762
)
(1,425
)
Net cash provided by financing activities
$
1,846
$
1,158
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
9,432
(22,343
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
64,077
86,420
CASH AND CASH EQUIVALENTS AT END OF YEAR
$
73,509
$
64,077
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest
$
14,647
$
9,622
Income taxes
2,775
4,165
These consolidated financial statements should be read in connection with the accompanying notes to the consolidated financial statements.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CSB Bancorp, Inc. (the “Company” or “CSB”) was incorporated in 1991 in the State of Ohio and is a registered bank holding company. The Company’s wholly owned subsidiaries are The Commercial and Savings Bank of Millersburg, Ohio (the “Bank”) and CSB Investment Services, LLC. The Company, through its subsidiaries, operates in the commercial banking industry.
The Bank, an Ohio-chartered bank organized in 1879, provides financial services through its sixteen Banking Centers located in Holmes, Stark, Tuscarawas and Wayne counties and a loan production office in Medina. These communities are the source of a substantial majority of the Bank’s deposit, loan, and trust activities. The majority of the Bank’s income is derived from commercial and retail lending activities, and investments in securities. Its primary deposit products are checking, savings, and term certificate accounts. Its primary lending products are residential real estate, commercial real estate, commercial, and installment loans. Substantially, all loans are secured by specific items of collateral including business assets, consumer assets, and real estate. Commercial loans are expected to be repaid with cash flow from business operations. Real estate loans are secured by both residential and commercial real estate.
Significant accounting policies followed by the Company are presented below.
BUSINESS SEGMENTS
The Company's operations have been evaluated for segment reporting and management has determined operations are managed along two operating segments, consisting of banking operations and trust services. The Company derives its banking operations revenue from business and consumer customers through loan and deposit products. However, these components are not separately reviewed and all expenses are not segregated from the rest of the Company's operations and therefore are not reportable as segments. The Company's chief operating decision maker is the senior management team, which includes the CEO, President, CFO, Chief Risk Officer, Senior Loan Officer and Senior Operations Officer. While the chief operating decision maker uses financial information related to the banking operations and trust services segments to analyze business performance and allocate resources, the trust services segment does not meet the quantitative threshold under GAAP to be considered a reportable segment. Trust services revenue and net income are less than 4% of total Company revenue or net income. As such, these operating segments are aggregated into a single reportable operating segment in the Consolidated Financial Statements.
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 affecting 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.
PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.
The Bank has a trust department and the assets held by the Bank in fiduciary or agency capacities for its customers are not included in the Consolidated Balance Sheets as such items are not assets of the Bank.
CASH AND CASH EQUIVALENTS
For purposes of the Consolidated Statements of Cash Flows, cash and cash equivalents include cash on hand and amounts due from banks which mature overnight or within ninety days.
DEBT SECURITIES
At the time of purchase all debt securities are evaluated and designated as available-for-sale (AFS) or held-to-maturity (HTM). Securities designated as AFS are carried at fair value with unrealized gains and losses on such securities, net of applicable income taxes, recognized as other comprehensive income or loss. HTM securities are recorded at amortized cost. Securities transferred from AFS to HTM are carried at their fair value on the date of transfer. On December 31, 2024, 62% of the total investment portfolio was classified as HTM. The amortized cost of debt securities is adjusted for the accretion of discounts to maturity and the amortization of premiums to the earlier of a bond’s call date or maturity based on the interest method. Such amortization and accretion are included in interest and dividends on securities. Gains and losses on sales of securities are accounted for on a trade date basis, using the specific identification method, and are included in noninterest income.
EQUITY SECURITIES
Equity securities are held at fair value. Holding gains and losses are recorded in income. Dividends on equity securities are recognized as income when earned.
RESTRICTED STOCK
Investments in FHLB and Federal Reserve Bank stock are classified as restricted stock, carried at cost, and evaluated for impairment. The Bank is required to maintain an investment in common stock of the FHLB and Federal Reserve Bank because the Bank is a member of the FHLB and the Federal Reserve System.
LOANS
Loans that management has the intent and ability to hold for the foreseeable future, until maturity, or pay-off, generally are stated at their outstanding principal amount, adjusted for charge-offs, the allowance for credit losses, and any deferred loan fees or costs on originated loans. Interest is accrued based upon the daily outstanding principal balance. Loan origination fees and certain direct origination costs are capitalized and recognized as an adjustment of the yield over the life of the related loan.
Interest income is not reported when full repayment is in doubt, typically when the loan is individually evaluated, or payments are past due over 90 days. All interest accrued but not collected for loans placed on nonaccrual or charged-off is reversed and charged against interest income. The interest on these loans is accounted for on a cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
At origination, a determination is made whether a loan will be held in the Bank’s portfolio or is intended for sale in the secondary market. Mortgage loans held for sale are recorded at the lower of the aggregate cost or fair value. Generally, these loans are held for sale for less than three (3) days. The Bank recognizes gains and losses on sales of the loans held for sale when the sale is completed.
ALLOWANCE FOR CREDIT LOSSES
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 individual 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.
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 disposal 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.
The ACL for off-balance sheet commitments is estimated on the likelihood and amount of funding under the same criteria used for loans under the ACL. The ACL for off-balance sheet commitments is recorded in other liabilities in the Consolidated Balance Sheets.
HTM Securities - Any expected credit loss is recorded through the ACL on HTM securities and is deducted from the amortized cost basis on the balance sheet. The majority of HTM securities are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies, and have a long history of no credit losses. Therefore, there is no credit loss expectation on these securities.
AFS Securities - The AFS securities portfolio is evaluated on a quarterly basis for indicators of credit loss. Management reviews the amount of unrealized loss, the credit rating history, market trends of similar security classes, time remaining to maturity, and the source of principal and interest payments to identify securities which could potentially have a credit loss. For those securities that management intends to sell before the recovery of their amortized cost basis, the difference between fair value and amortized cost is considered to have a credit loss and is recognized in provision for credit loss expense and the amortized cost is written down to the realizable value through a charge-off. For those AFS securities that management does not intend to sell prior to expected recovery of the amortized cost basis, the credit portion is recognized through the ACL on AFS securities, while the noncredit portion is recognized through the accumulated other comprehensive income or loss included in shareholders' equity. Non-credit related impairment is a result of other factors, including changes in interest rates.
OTHER REAL ESTATE OWNED
Other real estate acquired through or in lieu of foreclosure is initially recorded at fair value, less estimated costs to sell, and any loan balance in excess of fair value is charged to the allowance for credit losses. Subsequent valuations are periodically performed, and write-downs are included in noninterest expenses, as well as expenses related to maintenance of the properties. Gains or losses upon sale are recorded through noninterest income. There was no other real estate owned on December 31, 2024 or 2023.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost, less accumulated depreciation and amortization. Land is carried at cost. Depreciation and amortization are determined based on the estimated useful lives of the individual assets (typically 20 to 40 years for buildings and 3 to 10 years for equipment) and is computed using the straight-line method. Leasehold improvements are amortized over the useful life of the asset, or lease term, whichever is shorter. Expenses for maintenance and repairs are charged against income as incurred. Costs of major additions and improvements are capitalized.
GOODWILL
Goodwill is not amortized but is tested for impairment at least annually in the fourth quarter or more frequently if indicators of impairment are present. The evaluation for impairment involves comparing the current fair value of the reporting unit to the carrying value, including goodwill. If the current fair value of a reporting unit exceeds the carrying value, no additional testing is required, and an impairment loss is not recorded. The Company uses market capitalization and multiples of tangible book value methods, based on observable bank acquisitions in the state of Ohio, to determine the estimated current fair value of its reporting unit. Based on this analysis no impairment was recorded in 2024 or 2023.
MORTGAGE SERVICING RIGHTS
Mortgage servicing rights (“MSRs”) represent the right to service loans for third party investors. MSRs are recognized at fair value as a separate asset upon the sale of mortgage loans to a third-party investor with the servicing rights retained by the Company. Originated MSRs are recorded at allocated fair value at the time of the sale of the loans to the third-party investor. MSRs are amortized in proportion to and over the estimated period of net servicing income. MSRs are carried at amortized cost, less a valuation allowance for impairment, if any. MSRs are evaluated on a discounted earnings basis to determine the present value of future earnings of the underlying serviced mortgages. All assumptions are reviewed annually, or more frequently if necessary, and adjusted to reflect current and anticipated market conditions.
BANK-OWNED LIFE INSURANCE
The cash surrender value of bank-owned life insurance policies is included as an asset on the Consolidated Balance Sheets and any increases in the cash surrender value are recorded as noninterest income on the Consolidated Statements of Income. In the event of the death of an individual insured under these policies, the Company would receive a death benefit, which would be recorded as noninterest income.
REPURCHASE AGREEMENTS
Substantially all securities sold under repurchase agreements represent amounts advanced by various customers. Securities owned by the Bank are pledged to secure those obligations. Repurchase agreements are not deposits and are not covered by federal deposit insurance.
ADVERTISING COSTS
All advertising costs are expensed as incurred. Advertising expenses amounted to $187 thousand, $196 thousand for the years ended 2024 and 2023, respectively.
FEDERAL INCOME TAXES
The Company and its subsidiaries file a consolidated federal tax return. Deferred income taxes are recorded on temporary differences between financial statement and income tax reporting. Temporary differences are differences between the amounts of assets and liabilities reported for financial statement purposes and their respective tax bases. Deferred tax assets are recognized for temporary differences deductible in future years’ tax returns and for operating loss and tax credit carry forwards. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized. Deferred tax liabilities are recognized for temporary differences taxable in future years’ tax returns.
The Bank, domiciled in Ohio, is not currently subject to state and local income taxes.
COMPREHENSIVE INCOME
The Company includes recognized revenue, expenses, gains, and losses in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the Consolidated Balance Sheets, net of tax, these items along with net income are components of comprehensive income. The unrealized loss on securities transferred from AFS to HTM at the date of transfer, is amortized over the remaining life of the securities as part of comprehensive income.
TRANSFERS OF FINANCIAL ASSETS
Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions constraining it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
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:
(Dollars in thousands, except per share data)
Weighted average common shares issued
2,980,602
2,980,602
Average treasury shares
(319,294
)
(300,700
)
Total weighted average common shares outstanding basic and diluted
2,661,308
2,679,902
Net income
$
10,012
$
14,756
Earnings per share, basic and diluted
3.76
5.51
SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date these financial statements were issued.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic740): Improvements to Income Tax Disclosure. This new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This Update also includes certain other amendments to improve the effectiveness of income tax disclosures. It is effective for public business entities for annual periods beginning after December 15, 2024. This update is not expected to have a significant impact on the Company's financial statements.
ACCOUNTING PRONOUNCEMENTS ADOPTED IN 2024
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments' significant expenses on an interim and annual basis. This ASU became effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Public entities are required to adopt the changes retrospectively, recasting each prior-period disclosure for which a comparative income statement is presented in the period of adoption. Upon adoption the Company expanded its disclosures regarding reportable segments, which are included above in Note 1 to the Consolidated Financial Statements.
RECLASSIFICATION OF COMPARATIVE AMOUNTS
Certain comparative amounts from the prior years have been reclassified to conform to current year classifications. Such classifications had no effect on net income or shareholders’ equity.
NOTE 2 - SECURITIES
Securities consisted of the following on December 31:
(Dollars in thousands)
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Allowance for Credit Losses
Fair
Value
Available-for-sale
U.S. Treasury securities
$
13,487
$
$
(81
)
$
-
$
13,414
U.S. Government agencies
6,000
-
(302
)
-
5,698
Mortgage-backed securities of government agencies
69,746
(7,078
)
-
62,698
Asset-backed securities of government agencies
-
(6
)
-
State and political subdivisions
15,051
-
(805
)
-
14,246
Corporate bonds
30,048
(1,073
)
-
28,980
Total available-for-sale
134,736
(9,345
)
-
125,434
Held-to-maturity
U.S. Treasury securities
7,854
-
(621
)
-
7,233
Mortgage-backed securities of government agencies
193,937
-
(30,862
)
-
163,075
State and political subdivisions
2,518
-
(223
)
-
2,295
Total held-to-maturity
204,309
-
(31,706
)
-
172,603
Equity securities
-
-
Restricted stock
1,520
-
-
-
1,520
Total securities
$
340,750
$
$
(41,051
)
$
-
$
299,823
Available-for-sale
U.S. Treasury securities
$
18,110
$
-
$
(421
)
$
-
$
17,689
U.S. Government agencies
14,000
-
(848
)
-
13,152
Mortgage-backed securities of government agencies
72,279
(7,332
)
-
65,045
Asset-backed securities of government agencies
-
(25
)
-
State and political subdivisions
17,476
-
(890
)
-
16,586
Corporate bonds
29,135
(2,056
)
-
27,085
Total available-for-sale
151,548
(11,572
)
-
140,080
Held-to-maturity
U.S. Treasury securities
10,305
-
(798
)
-
9,507
Mortgage-backed securities of government agencies
213,425
-
(30,534
)
-
182,891
State and political subdivisions
2,549
(219
)
-
2,332
Total held-to-maturity
226,279
(31,551
)
-
194,730
Equity securities
-
-
Restricted stock
1,535
-
-
-
1,535
Total securities
$
379,547
$
$
(43,123
)
$
-
$
336,604
The amortized cost and fair value of debt securities on December 31, 2024, 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
$
30,196
$
29,883
Due after one through five years
21,157
20,331
Due after five through ten years
16,821
15,489
Due after ten years
66,562
59,731
Total debt securities available-for-sale
$
134,736
$
125,434
Held-to-maturity
Due in one year or less
$
2,484
$
2,420
Due after one through five years
3,305
3,087
Due after five through ten years
4,706
4,142
Due after ten years
193,814
162,954
Total debt securities held-to-maturity
$
204,309
$
172,603
Securities with a carrying value of approximately $134 million and $126 million were pledged on December 31, 2024, and 2023 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 FHLB and Federal Reserve Bank stock. The Bank’s investment in FHLB stock amounted to $1.0 million on December 31, 2024, and 2023. Federal Reserve Bank stock was $471 thousand on December 31, 2024, and 2023.
There were no proceeds from sales of debt securities for the years ended December 31, 2024 and 2023. Unrealized gains recognized on equity securities on the consolidated statements of income were $8 thousand and $15 thousand, respectively for the years ended December 31, 2024 and 2023.
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 December 31, 2024, 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 December 31, 2024, aggregated by credit quality indicator:
(Dollars in thousands)
U.S. Treasury securities
Mortgage- backed securities of government agencies
State and political subdivisions
December 31, 2024
Credit rating:
AAA / AA / A
$
7,854
$
193,937
$
2,518
BBB / BB / B
-
-
-
Lower than B
-
-
-
Non-rated
-
-
-
Total
$
7,854
$
193,937
$
2,518
The following table presents gross unrealized losses, fair value of securities, aggregated by investment category, and length of time individual available-for-sale securities have been in a continuous unrealized loss position, on December 31 2024 and 2023:
Less Than 12 Months
12 Months or More
Total
(Dollars in thousands)
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Gross
Unrealized
Losses
Fair
Value
Available-for-sale
U.S. Treasury securities
$
-
$
-
$
(81
)
$
8,949
$
(81
)
$
8,949
U.S. Government agencies
-
-
(302
)
5,698
(302
)
5,698
Mortgage-backed securities of government
agencies
(88
)
12,944
(6,990
)
45,063
(7,078
)
58,007
Asset-backed securities of government
agencies
-
-
(6
)
(6
)
State and political subdivisions
(19
)
1,446
(786
)
12,800
(805
)
14,246
Corporate bonds
-
-
(1,073
)
27,473
(1,073
)
27,473
Total temporarily impaired available-for-sale securities
$
(107
)
$
14,390
$
(9,238
)
$
100,381
$
(9,345
)
$
114,771
Available-for-sale
U.S. Treasury securities
$
-
$
-
$
(421
)
$
17,689
$
(421
)
$
17,689
U.S. Government agencies
-
-
(848
)
13,152
(848
)
13,152
Mortgage-backed securities of government
agencies
(3
)
1,909
(7,329
)
52,144
(7,332
)
54,053
Asset-backed securities of government
agencies
-
-
(25
)
(25
)
State and political subdivisions
(28
)
1,783
(862
)
14,263
(890
)
16,046
Corporate bonds
-
-
(2,056
)
26,586
(2,056
)
26,586
Total temporarily impaired available-for-sale securities
$
(31
)
$
3,692
$
(11,541
)
$
124,357
$
(11,572
)
$
128,049
There were 112 available-for-sale securities in an unrealized loss position on December 31, 2024, 104 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 $82 million of total AFS securities. The remaining $43 million of non-agency debt securities is made up of Corporate Bonds and debt securities of 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 $10 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 decline.
NOTE 3 - LOANS
Loans consisted of the following on December 31:
(Dollars in thousands)
Commercial and industrial
$
144,376
$
152,125
Commercial real estate
190,514
190,702
Commercial lessors of buildings
101,168
82,687
Construction
64,262
49,214
Consumer mortgage
177,578
166,891
Home equity line of credit
44,971
43,269
Consumer installment
9,645
10,636
Consumer indirect
5,276
5,957
Total loans
737,790
701,481
Allowance for credit losses
(7,595
)
(6,607
)
Deferred loan fees, net
(149
)
(77
)
Net Loans
$
730,046
$
694,797
Loan Origination/Risk Management
The Company has certain lending policies and procedures in place designed to maximize loan income within an acceptable level of risk. Management reviews and the Board of Directors 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 and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand their 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. However, the cash flows of borrowers 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 or inventory, and generally 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.
Commercial real estate loans are subject to underwriting standards and processes similar to commercial and industrial 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.
With respect to loans to developers and builders 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, lease rates, and financial analysis of 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 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 permanent financing from the Company. 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. Policies and procedures are developed and modified, as needed, by management to monitor and manage consumer loan risk. This activity, coupled with relatively small loan amounts spread across many individual borrowers, minimizes risk.
The Company engages an independent loan review vendor that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management and the Audit Committee. 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.
Concentrations of Credit
Nearly all the Company’s lending activity occurs within the State of Ohio, including the five counties of Holmes, Medina, Stark, Tuscarawas, and Wayne, as well as surrounding counties. The majority of the Company’s loan portfolio consists of commercial and industrial and commercial real estate loans. Credit concentrations, including commitments, as determined using North American Industry Classification Codes (NAICS), to the three largest industries compared to total loans at December 31, 2024, included $77 million, or 10% of total loans to lessors of non-residential buildings; $37 million, or 5%, of total loans to animal food producers; and $30 million, or 4% of total loans to construction, and equipment rental and leasing. The Company has less than 2% of total loans outstanding to loans secured by commercial office space. 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 and interest payments, and the adequacy of the collateral received.
The top ten collateral exposures in commercial real estate and commercial lessors of buildings at December 31, 2024 are as follows: Industrial, manufacturing and production $56 million; warehouse $39 million; healthcare facilities $27 million; residential investment property $27 million; retail strip center $17 million; auto repair $15 million; retail store $13 million; senior housing $12 million; hotels $11 million; nonfarm/nonresidential $10 million.
Allowance for Credit Losses
The following table details activity in the allowance for credit losses ("ACL") by portfolio segment for the years ended December 31, 2024, and 2023. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
During 2024, the increase in the provision for credit loss expense for commercial and industrial and commercial real estate loans was primarily related to one loan relationship which is in process of court liquidation. This relationship has been charged down by $6.2 million which resulted in an increase in the historical loss rates applied to the loans in each of these categories. The decrease in the provision for consumer mortgages and home equity loans was primarily due to the stable economy and collateral values, with very few historical losses in these categories. The increase in the provision for consumer installment and consumer indirect loans is due to the increase in historical losses in this portfolio.
During 2023, ACL balances were affected by the adoption of ASC 326 which changed the methodology for calculating the allowance for credit losses. These changes resulted in the addition of three new loan categories. In addition to the new methodology changes, the decrease in the commercial real estate provision was primarily related to the payoff of one large loan relationship with a specific allocation and the improvement of other specifically evaluated loans. The decrease in the provision for commercial and industrial loans was primarily due to the recovery of a prior loan charge off. The increase in the provision for commercial lessors of buildings relates to the increase in loans graded special mention. The increase in provision for consumer mortgages primarily relates to increased loan volume. The increase in the consumer indirect category is due to the increase in charge-offs in this portfolio.
Summary of Allowance for Credit Losses on Loans
The following table details activity in the allowance for credit losses on loans during the year ended December 31:
(Dollars in thousands)
Beginning ACL Balance
Charge-offs
Recoveries
Provision for Credit Losses (Recovery)
Ending ACL Balance
December 31, 2024
Commercial and industrial
$
1,737
$
(5,671
)
$
$
6,779
$
2,919
Commercial real estate
1,637
(598
)
1,681
Commercial lessors of buildings
1,200
-
-
(59
)
1,141
Construction
-
-
Consumer mortgage
1,107
-
(305
)
Home equity line of credit
-
-
(83
)
Consumer installment
(65
)
Consumer indirect
(60
)
Total
$
6,607
$
(6,394
)
$
$
7,244
$
7,595
Beginning ALL Balance
Impact of Adopting ASC 326
Charge-offs
Recoveries
Provision for Credit Losses (Recovery)
Ending ACL Balance
December 31, 2023
Commercial and industrial
$
1,110
$
$
-
$
$
(212
)
$
1,737
Commercial real estate
2,760
(541
)
-
(591
)
1,637
Commercial lessors of buildings
-
-
-
1,200
Construction
(515
)
-
-
Consumer mortgage
1,268
(580
)
-
1,107
Home equity line of credit
-
-
-
Consumer installment
(183
)
(46
)
Consumer indirect
-
(66
)
Unallocated
(664
)
-
-
-
-
Total
$
6,838
$
(559
)
$
(112
)
$
$
$
6,607
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
Days
Past
Due
60-89
Days
Past
Due
90 Days +
Past Due
Total Past Due
Total
Loans
December 31, 2024
Commercial and industrial
$
144,274
$
$
$
-
$
$
144,376
Commercial real estate
190,514
-
-
-
-
190,514
Commercial lessors of buildings
101,168
-
-
-
-
101,168
Construction
64,262
-
-
-
-
64,262
Consumer mortgage
176,403
1,175
177,578
Home equity line of credit
44,595
-
-
44,971
Consumer installment
9,637
-
9,645
Consumer indirect
5,238
-
5,276
Total Loans
$
736,091
$
1,087
$
$
$
1,699
$
737,790
December 31, 2023
Commercial and industrial
$
151,964
$
$
$
-
$
$
152,125
Commercial real estate
190,702
-
-
-
-
190,702
Commercial lessors of buildings
82,687
-
-
-
-
82,687
Construction
49,214
-
-
-
-
49,214
Consumer mortgage
166,411
-
166,891
Home equity line of credit
42,955
-
43,269
Consumer installment
10,602
-
10,636
Consumer indirect
5,821
-
5,957
Total Loans
$
700,356
$
$
$
-
$
1,125
$
701,481
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 December 31:
(Dollars in thousands)
Nonaccrual with no ACL
Nonaccrual with ACL
Total Nonaccrual
Loans Past Due Over 90 Days Still Accruing
Total Nonperforming
December 31, 2024
Commercial and industrial
$
$
$
$
-
$
Commercial real estate
-
Commercial lessors of buildings
-
-
Construction
-
-
-
-
-
Consumer mortgage
-
Home equity line of credit
-
-
Consumer installment
-
-
Consumer indirect
-
-
Total Loans
$
$
$
1,219
$
$
1,705
December 31, 2023
Commercial and industrial
$
-
$
$
$
-
$
Commercial real estate
-
-
Commercial lessors of buildings
-
-
Construction
-
-
-
-
-
Consumer mortgage
-
-
Home equity line of credit
-
-
-
-
-
Consumer installment
-
-
Consumer indirect
-
-
Total Loans
$
-
$
$
$
-
$
Interest income recognized on nonaccrual loans as of December 31, 2024 was $6 thousand on commercial real estate loans, $33 thousand on consumer mortgage loans, and $2 thousand on commercial & industrial loans. Several consumer mortgage loans on nonaccrual are at an amortized cost basis of $0 and all payments are being recognized as interest income when received.
Collateral-Dependent Financial Assets
When loan repayment is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty, expected credit losses are based on the fair value of the collateral. The class of loan represents the primary collateral type associated with the loan. There were no collateral dependent loans as of December 31, 2023. The following table presents the amortized cost basis of collateral dependent loans by class of loan:
Type of Collateral
(Dollars in thousands)
Real Estate
Blanket Liens
December 31, 2024
Commercial and industrial
$
-
$
Commercial real estate
-
Total collateral dependent loans
$
$
Credit Quality Indicators
The Company categorizes commercial and commercial real estate 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 and commercial real estate loans individually by classifying the loans as to credit risk. This analysis includes commercial loans with an outstanding exposure balance greater than $500 thousand. This analysis is performed on an annual basis.
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 collectable 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. Loans classified as special mention have a material weakness deserving of management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the loan or of the Bank’s credit position at some future date.
Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses jeopardizing the liquidation of the debt. They are characterized by the distinct possibility that the Bank 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 existing facts, conditions, values, highly questionable, and improbable.
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:
Term Loans Amortized Costs Basis by Origination Year
(Dollars in thousands)
Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
December 31, 2024
Commercial and industrial:
Pass
$
20,361
$
20,376
$
14,446
$
7,291
$
2,920
$
6,576
$
44,566
$
-
$
116,536
Special mention
-
2,227
-
1,987
-
6,056
Substandard
-
8,479
4,170
1,107
7,269
-
21,784
Doubtful
-
-
-
-
-
-
-
-
-
Total
$
20,361
$
29,724
$
20,843
$
8,753
$
3,190
$
7,683
$
53,822
$
-
$
144,376
YTD gross charge-offs
$
-
$
1,393
$
-
$
$
-
$
-
$
4,268
$
-
$
5,671
Commercial real estate:
Pass
$
15,216
$
25,238
$
39,541
$
41,742
$
13,049
$
25,258
$
$
-
$
160,198
Special Mention
-
-
1,245
5,216
2,013
9,701
-
-
18,175
Substandard
1,252
2,211
8,131
-
-
12,141
Doubtful
-
-
-
-
-
-
-
-
-
Total
$
15,561
$
26,490
$
40,982
$
49,169
$
15,068
$
43,090
$
$
-
$
190,514
YTD gross charge-offs
$
-
$
$
-
$
-
$
-
$
-
$
-
$
-
$
Commercial lessors of buildings:
Pass
$
22,287
$
23,003
$
21,576
$
15,206
$
3,043
$
13,792
$
$
-
$
99,291
Special Mention
-
-
-
-
-
-
-
Substandard
-
-
-
1,697
Doubtful
-
-
-
-
-
-
-
-
-
Total
$
22,287
$
23,003
$
22,133
$
15,480
$
3,992
$
13,851
$
$
-
$
101,168
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Commercial construction:
Pass
$
12,420
$
9,588
$
8,084
$
$
$
$
2,239
$
-
$
34,425
Special Mention
-
-
-
-
-
-
-
-
-
Substandard
-
20,500
-
-
-
-
-
20,574
Doubtful
-
-
-
-
-
-
-
-
-
Total
$
12,420
$
30,088
$
8,084
$
$
$
$
2,239
$
-
$
54,999
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Total
Pass
$
70,284
$
78,205
$
83,647
$
65,057
$
19,857
$
46,057
$
47,343
$
-
$
410,450
Special Mention
-
3,472
6,208
2,174
9,701
1,987
-
24,411
Substandard
30,231
1, 2
4,923
2,955
1,064
9,371
7,307
-
56,196
Doubtful
-
-
-
-
-
-
-
-
-
Total
$
70,629
$
109,305
$
92,042
$
74,220
$
23,095
$
65,129
$
56,637
$
-
$
491,057
YTD gross charge-offs
$
-
$
1,991
$
-
$
$
-
$
-
$
4,268
$
-
$
6,269
1 Balances include $1.9 million USDA guarantee.
2 Balances include $16.4 million USDA guarantee.
Term Loans Amortized Costs Basis by Origination Year
(Dollars in thousands)
Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
December 31, 2023
Commercial and industrial:
Pass
$
32,037
$
25,996
$
12,196
$
5,207
$
3,388
$
7,112
$
45,423
$
-
$
131,359
Special mention
3,872
-
4,826
Substandard
2,968
1,021
1,017
1,416
8,630
-
15,940
Doubtful
-
-
-
-
-
-
-
-
-
Total
$
32,895
$
29,189
$
13,739
$
6,257
$
3,527
$
8,593
$
57,925
$
-
$
152,125
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Commercial real estate:
Pass
$
22,206
$
38,696
$
54,830
$
12,233
$
19,543
$
21,938
$
$
-
$
170,093
Special Mention
1,380
2,292
2,496
-
-
-
6,731
Substandard
1,150
-
-
11,374
-
-
13,878
Doubtful
-
-
-
-
-
-
-
-
-
Total
$
23,597
$
40,076
$
58,010
$
14,729
$
20,009
$
33,634
$
$
-
$
190,702
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Commercial lessors of buildings:
Pass
$
18,353
$
22,762
$
15,455
$
6,429
$
3,543
$
8,934
$
$
-
$
75,836
Special Mention
-
1,687
-
3,578
-
-
-
5,701
Substandard
-
-
-
-
-
-
1,150
Doubtful
-
-
-
-
-
-
-
-
-
Total
$
18,353
$
23,198
$
17,142
$
7,418
$
7,121
$
9,095
$
$
-
$
82,687
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Commercial construction:
Pass
$
24,119
$
14,855
$
$
$
$
$
-
$
-
$
40,359
Special Mention
-
-
-
-
-
Substandard
-
-
-
-
-
-
Doubtful
-
-
-
-
-
-
-
-
-
Total
$
24,119
$
15,113
$
$
$
$
$
-
$
-
$
41,405
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Total
Pass
$
96,715
$
102,309
$
83,057
$
24,141
$
26,755
$
38,240
$
46,430
$
-
$
417,647
Special Mention
2,299
4,544
3,164
3,611
3,872
-
18,194
Substandard
1,932
2,968
1,909
2,036
12,951
8,630
-
31,078
Doubtful
-
-
-
-
-
-
-
-
-
Total
$
98,964
$
107,576
$
89,510
$
29,341
$
31,018
$
51,578
$
58,932
$
-
$
466,919
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
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
(Dollars in thousands)
Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
December 31, 2024
Consumer mortgage:
Performing
$
21,807
$
28,296
$
31,939
$
32,540
$
28,571
$
33,859
$
-
$
-
$
177,012
Nonperforming
-
-
-
-
Total
$
21,807
$
28,296
$
32,298
$
32,616
$
28,622
$
33,939
$
-
$
-
$
177,578
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Consumer construction:
Performing
$
7,511
$
$
$
$
$
$
-
$
-
$
9,263
Nonperforming
-
-
-
-
-
-
-
-
-
Total
$
7,511
$
$
$
$
$
$
-
$
-
$
9,263
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Home equity line of credit:
Performing
$
-
$
-
$
-
$
-
$
-
$
-
$
44,865
$
$
44,900
Nonperforming
-
-
-
-
-
-
-
Total
$
-
$
-
$
-
$
-
$
-
$
-
$
44,936
$
$
44,971
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Consumer installment:
Performing
$
3,660
$
3,427
$
1,630
$
$
$
$
$
-
$
9,597
Nonperforming
-
-
-
-
Total
$
3,660
$
3,433
$
1,633
$
$
$
$
$
-
$
9,645
YTD gross charge-offs
$
$
$
$
$
$
$
-
$
-
$
Consumer indirect:
Performing
$
$
$
$
$
$
1,926
$
-
$
-
$
5,209
Nonperforming
-
-
-
-
-
-
Total
$
$
$
$
$
$
1,975
$
-
$
-
$
5,276
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
$
-
$
-
$
Total
Performing
$
33,744
$
32,991
$
35,302
$
33,641
$
29,350
$
35,990
$
44,928
$
$
245,981
Nonperforming
-
-
Total
$
33,744
$
33,015
$
35,664
$
33,720
$
29,401
$
36,155
$
44,999
$
$
246,733
Total YTD gross charge-offs
$
$
$
$
$
$
$
-
$
-
$
Term Loans Amortized Costs Basis by Origination Year
(Dollars in thousands)
Prior
Revolving Loans Amortized Cost Basis
Revolving Loans Converted to Term
Total
December 31, 2023
Consumer mortgage:
Performing
$
24,521
$
34,798
$
35,802
$
32,259
$
8,931
$
30,408
$
-
$
-
$
166,719
Nonperforming
-
-
-
-
-
-
-
Total
$
24,521
$
34,798
$
35,802
$
32,259
$
8,931
$
30,580
$
-
$
-
$
166,891
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Consumer construction:
Performing
$
5,463
$
1,477
$
$
$
$
$
-
$
-
$
7,809
Nonperforming
-
-
-
-
-
-
-
-
-
Total
$
5,463
$
1,477
$
$
$
$
$
-
$
-
$
7,809
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Home equity line of credit:
Performing
$
-
$
-
$
-
$
-
$
-
$
-
$
43,223
$
$
43,269
Nonperforming
-
-
-
-
-
-
-
-
-
Total
$
-
$
-
$
-
$
-
$
-
$
-
$
43,223
$
$
43,269
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
Consumer installment:
Performing
$
5,705
$
3,067
$
$
$
$
$
$
-
$
10,636
Nonperforming
-
-
-
-
-
-
-
-
-
Total
$
5,705
$
3,067
$
$
$
$
$
$
-
$
10,636
YTD gross charge-offs
$
$
$
$
$
$
$
-
$
-
$
Consumer indirect:
Performing
$
$
1,086
$
$
$
$
2,128
$
-
$
-
$
5,869
Nonperforming
-
-
-
-
-
Total
$
$
1,089
$
$
$
$
2,132
$
-
$
-
$
5,957
YTD gross charge-offs
$
-
$
-
$
-
$
-
$
-
$
$
-
$
-
$
Total
Performing
$
36,547
$
40,428
$
37,669
$
33,823
$
9,737
$
32,761
$
43,291
$
$
234,302
Nonperforming
-
-
-
-
-
Total
$
36,547
$
40,431
$
37,669
$
33,823
$
9,818
$
32,937
$
43,291
$
$
234,562
Total YTD gross charge-offs
$
$
$
$
$
$
$
-
$
-
$
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 of the collateral 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, and 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 year ended December 31, 2024 and 2023.
Real Estate Loans in Foreclosure
There was no other real estate owned on December 31, 2024, or 2023. Mortgage loans in the process of foreclosure were $74 thousand on December 31, 2024 and $8 thousand on December 31, 2023. Repossessed assets were $14 thousand on December 31, 2024, and there were no repossessed assets on December 31, 2023.
Mortgage Servicing Rights
For the years ended December 31, 2024 and 2023, the Company had outstanding MSRs of $621 thousand and $600 thousand, respectively. The capitalized additions of servicing rights are included in net gain on sale of loans on the Consolidated Statements of Income. No valuation allowance was recorded on December 31, 2024 or 2023, as the fair value of the MSRs approximates their carrying value. On December 31, 2024, the Company had $122 million residential mortgage loans sold with servicing retained as compared to $124 million sold with servicing retained on December 31, 2023.
Total loans serviced for others including commercial loans, approximated $136 million and $132 million on December 31, 2024, and 2023, respectively.
The following summarizes mortgage servicing rights capitalized and amortized during each year:
(Dollars in thousands)
Beginning of year
$
$
Capitalized additions
Amortization
(67
)
(68
)
Valuation allowance
-
-
End of year
$
$
NOTE 4 - PREMISES AND EQUIPMENT
Premises and equipment consisted of the following on December 31:
(Dollars in thousands)
Land and improvements
$
2,561
$
2,540
Buildings and improvements
15,993
14,698
Furniture and equipment
7,234
6,642
Leasehold improvements
Premises and equipment, cost
26,128
24,209
Accumulated depreciation
(12,059
)
(11,207
)
Premises and equipment, net
$
14,069
$
13,002
Depreciation expense amounted to $879 thousand and $826 thousand for the years ended December 31, 2024, and 2023, respectively.
NOTE 5 - LEASES
Operating leases in which the Company is the lessee are recorded as operating lease Right of Use (“ROU”) assets and operating lease liabilities, included in other assets and other liabilities, respectively, on the consolidated balance sheets. The Company does not currently have any finance leases. Operating lease ROU assets represent the right to use an underlying asset during the lease term and operating lease liabilities represent the obligation to make lease payments arising from the lease.
Operating lease expense, which is comprised of amortization of the ROU asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term and is recorded in occupancy and equipment expense in the Consolidated Statements of Income. The leases relate to bank branches with remaining lease terms of generally 2 to 5 years. Certain lease arrangements contain extension options which are typically 2 to 5 years at the then fair market rental rates. If these extension options are considered reasonably certain of exercise, they are included in the lease term.
As of December 31, 2024, operating lease ROU assets were $203 thousand, and lease liabilities were $196 thousand. These amounts are included in other assets and other liabilities on the Consolidated Balance Sheets. For the years ended December 31, 2024, and 2023, CSB recognized $123 thousand, and $112 thousand in operating lease cost respectively, which are included in occupancy expense on the Consolidated Statements of Income.
The following table summarizes other information related to our operating leases:
December 31, 2024
December 31, 2023
Weighted-average remaining lease term - operating leases in years
1.80
2.80
Weighted-average discount rate - operating leases
2.69
%
2.69
%
The following table presents aggregate lease maturities and obligations:
(Dollars in thousands)
December 31, 2024
$
-
2030 and thereafter
-
Total lease payments
Less: interest
Present value of lease liabilities
$
NOTE 6 - INTEREST-BEARING DEPOSITS
Interest-bearing deposits on December 31 were as follows:
(Dollars in thousands)
Demand
$
218,866
$
256,621
Savings
301,410
277,529
Time deposits:
$250,000 and greater
80,384
59,347
Other
162,869
132,233
Total interest-bearing deposits
$
763,529
$
725,730
On December 31, 2024, stated maturities of time deposits were as follows:
(Dollars in thousands)
$
212,968
24,539
4,851
Total
$
243,253
NOTE 7 - BORROWINGS
Short-term borrowings
Short-term borrowings include overnight repurchase agreements, federal funds purchased, and short-term advances through the FHLB. The outstanding balances and related information for short-term borrowings are summarized as follows:
(Dollars in thousands)
Balance at year-end
$
25,683
$
35,843
Average balance outstanding
27,266
32,478
Maximum month-end balance
34,750
37,479
Weighted-average rate at year-end
1.03
%
1.18
%
Weighted-average rate during the year
1.15
1.03
Average balances outstanding during the year represent daily average balances; average interest rates represent interest expense divided by the related average balances.
The following table provides additional detail regarding the collateral pledged to secure repurchase agreements accounted for as secured borrowings:
Remaining Contractual Maturity
Overnight and Continuous
(Dollars in thousands)
December 31,
December 31,
Securities of U.S. Government agencies and mortgage-backed securities of
government agencies pledged, fair value
$
25,745
$
36,002
Repurchase agreements
25,683
35,843
Other borrowings
The following table sets forth information concerning other borrowings:
Maturity Range
Weighted
Average
Interest
Stated Interest
Rate Range
At December 31,
(Dollars in thousands)
From
To
Rate
From
To
Fixed-rate amortizing
6/1/2032
6/1/2037
1.98
%
1.95
%
2.01
%
$
1,266
$
1,754
Maturities of other borrowings on December 31, 2024, are summarized as follows for the years ended December 31:
(Dollars in thousands)
Amount
Weighted
Average
Rate
$
1.98
%
1.98
1.98
1.98
1.98
2030 and beyond
1.99
Total other borrowings
$
1,266
1.98
%
Monthly principal and interest payments, as well as 20% principal curtailments on the borrowings’ anniversary dates are due on the fixed-rate amortizing borrowings. FHLB borrowings are secured by a blanket collateral agreement on all one-to-four family residential real estate loans. On December 31, 2024, the Company had the capacity to borrow an additional $126 million from the FHLB.
NOTE 8 - INCOME TAXES
Income tax expense was as follows:
(Dollars in thousands)
Current
$
2,205
$
3,334
Deferred
Total income tax provision
$
2,323
$
3,627
Effective tax rates were 18.8% and 19.7% for 2024 and 2023 and differ from the federal statutory rate of 21% applied to income before taxes due to the following:
(Dollars in thousands)
Expected provision using statutory federal income tax rate
$
2,590
$
3,860
Effect of bond and loan tax-exempt income
(112
)
(104
)
Bank owned life insurance income
(171
)
(147
)
Other
Total income tax provision
$
2,323
$
3,627
The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities on December 31 were as follows:
(Dollars in thousands)
Allowance for credit losses
$
1,693
$
1,485
Unrealized loss on securities
2,238
2,730
Other
Deferred tax assets
4,108
4,440
Premises and equipment
(564
)
(554
)
Federal Home Loan Bank stock dividends
(93
)
(95
)
Deferred loan fees
(335
)
(312
)
Prepaid expenses
(129
)
(205
)
Other
(727
)
(640
)
Deferred tax liabilities
(1,848
)
(1,806
)
Net deferred tax asset
$
2,260
$
2,634
There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Consolidated Statements of Income. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years prior to 2021.
NOTE 9 - EMPLOYEE BENEFITS
The Company sponsors a contributory 401(k) profit-sharing plan (the “Plan”) covering substantially all employees who meet certain age and service requirements. The Plan permits investment in the Company’s common stock subject to various limitations and provides for discretionary profit sharing and matching contributions. The discretionary profit-sharing contribution is determined annually by the Board of Directors and amounted to 2.25% in 2024 and 3.25% in 2023 of each eligible participant’s compensation. The Plan provides for a 100% Company match up to a maximum of 4% of eligible compensation. The Company auto enrolls all eligible new hires into the Plan. Expense under the Plan amounted to approximately $520 thousand and $809 thousand for 2024 and 2023, respectively.
The Company sponsors a non-qualified deferred compensation plan covering eligible officers. Expense under the plan amounted to $7 thousand and $6 thousand in 2024 and 2023, respectively.
NOTE 10 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Bank is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are primarily loan commitments to extend credit and letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amounts recognized in the Consolidated Balance Sheets. The contract amount of these instruments reflects the extent of involvement the Bank has in these financial instruments. The Bank’s exposure to credit loss in the event of the nonperformance by the other party to the financial instruments for loan commitments to extend credit and letters of credit is represented by the contractual amounts of these instruments. The Bank uses the same credit policies in making loan commitments as it does for on-balance sheet loans.
The following financial instruments whose contract amount represents credit risk were outstanding on December 31:
(Dollars in thousands)
Commitments to extend credit
$
285,090
$
277,553
Letters of credit
3,979
4,379
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Consumer commitments generally have fixed expiration dates and commercial commitments are generally due on demand and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral, obtained if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies, but may include residential real estate, accounts receivable, recognized inventory, property, plant and equipment, and income-producing commercial properties.
Letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party and are reviewed for renewal at expiration. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company requires collateral supporting these commitments when deemed appropriate.
The Company had $524 thousand allowance for credit losses for unfunded loan commitments as of December 31, 2024, and $736 thousand as of December 31,2023. The decrease in the ACL for unfunded loan commitments was primarily due the removal of a specific allocation to a substandard relationship that is no longer outstanding and a decrease in unfunded commitments on commercial construction loans as of December 31, 2024.
NOTE 11 - RELATED-PARTY TRANSACTIONS
In the ordinary course of business, loans are made by the Bank to executive officers, directors, their immediate family members, and their related business interests consistent with Federal Reserve Regulation O, SEC Regulation S-X, and GAAP definition of related parties.
The following is an analysis of activity of related-party loans for the years ended December 31:
(Dollars in thousands)
Balance at beginning of year
$
$
New loans and advances
Repayments, including loans sold
Balance at end of year
$
$
Deposits from executive officers, directors, their immediate family members, and their related business interests on December 31, 2024, and 2023 were approximately $18.4 million and $9.3 million.
NOTE 12 - REGULATORY MATTERS
The Company (on a consolidated basis) and Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s financial performance. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines involving quantitative measures of the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain minimum amounts and ratios (set forth in the following table) of Total capital, Tier 1 capital and Common equity tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to average assets (as defined). Management believes as of December 31, 2024 and 2023, the Company and Bank met or exceeded all capital adequacy requirements to which they are subject.
As of December 31, 2024, the most recent notification from federal and state banking agencies categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized” an institution must maintain minimum Total risk-based, Tier 1 risk-based, Common equity Tier 1, and Tier 1 leverage ratios as set forth in the following tables. There are no known conditions or events since that notification that Management believes have changed the Bank’s category.
The actual capital amounts and ratios of the Company and Bank as of December 31 are presented in the following tables:
Actual
Minimum
Required For
Capital Adequacy
Purposes
Minimum Required
To Be Well Capitalized
Under Prompt
Corrective Action
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total capital to risk-weighted assets
Consolidated
$
126,646
16.4
%
$
61,891
8.0
%
$
77,364
10.0
%
Bank
125,774
16.3
61,855
8.0
77,319
10.0
Tier 1 capital to risk-weighted assets
Consolidated
118,527
15.3
46,419
6.0
61,891
8.0
Bank
117,655
15.2
46,391
6.0
61,855
8.0
Common equity tier 1 capital to
risk-weighted assets
Consolidated
118,527
15.3
34,814
4.5
50,287
6.5
Bank
117,655
15.2
34,793
4.5
50,257
6.5
Tier 1 leverage ratio
Consolidated
118,527
9.7
48,644
4.0
60,805
5.0
Bank
117,655
9.7
48,627
4.0
60,783
5.0
Total capital to risk-weighted assets
Consolidated
$
120,824
16.3
%
$
59,480
8.0
%
$
74,349
10.0
%
Bank
120,184
16.2
59,446
8.0
74,308
10.0
Tier 1 capital to risk-weighted assets
Consolidated
113,481
15.3
44,610
6.0
59,480
8.0
Bank
112,841
15.2
44,585
6.0
59,446
8.0
Common equity tier 1 capital to
risk-weighted assets
Consolidated
113,481
15.3
33,457
4.5
48,327
6.5
Bank
112,841
15.2
33,439
4.5
48,300
6.5
Tier 1 leverage ratio
Consolidated
113,481
9.6
47,340
4.0
59,175
5.0
Bank
112,841
9.5
47,324
4.0
59,155
5.0
The Company’s primary source of funds with which to pay dividends, are dividends received from the Bank. The payment of dividends by the Bank to the Company is subject to restrictions by its regulatory agencies. These restrictions generally limit dividends to current year net income and prior two-years’ net retained earnings. Also, dividends may not reduce capital levels below the minimum regulatory requirements disclosed in the prior table. Under these provisions, on January 1, 2025, the Bank could dividend $24.3 million to the Company. The Company does not anticipate the financial need to obtain regulatory approval to pay dividends. Federal law prevents the Company from borrowing from the Bank unless loans are secured by specific obligations. Further, such secured loans are limited to an amount not exceeding ten percent of the Bank’s common stock and capital surplus.
NOTE 13 - CONDENSED PARENT COMPANY FINANCIAL INFORMATION
A summary of condensed financial information of the parent company as of December 31, 2024, and 2023, and for each of the two years in the period ended December 31, 2024, follows:
(Dollars in thousands)
CONDENSED BALANCE SHEETS
ASSETS
Cash deposited with subsidiary bank
$
$
Investment in subsidiary bank
113,963
107,299
Equity securities
Other assets
TOTAL ASSETS
$
114,932
$
108,003
LIABILITIES AND SHAREHOLDERS’ EQUITY
Total liabilities
$
$
Total shareholders’ equity
114,835
107,939
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
114,932
$
108,003
(Dollars in thousands)
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
Dividends on securities
$
$
Dividends from subsidiary
5,500
5,200
Unrealized gain on equity securities
Other income
-
Total income
5,523
5,224
Operating expenses
Income before taxes and undistributed equity
income of subsidiary
5,116
4,833
Income tax benefit
Equity earnings in subsidiary, net of dividends
4,814
9,849
NET INCOME
$
10,012
$
14,756
COMPREHENSIVE INCOME
$
11,862
$
17,405
(Dollars in thousands)
CONDENSED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Net income
$
10,012
$
14,756
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings in subsidiary, net of dividends
(4,814
)
(9,849
)
Unrealized gain on equity securities
(8
)
(15
)
Change in other assets and liabilities
Net cash provided by operating activities
5,191
4,904
Cash flows from financing activities
Cash dividends paid
(4,204
)
(4,013
)
Purchase of treasury stock
(762
)
(1,425
)
Net cash used in financing activities
(4,966
)
(5,438
)
Increase (decrease) in cash
(534
)
Cash at beginning of year
Cash at end of year
$
$
NOTE 14 - FAIR VALUE MEASUREMENTS
The Company provides disclosures about assets and liabilities carried at fair value. The framework provides a fair value hierarchy prioritizing 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 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 observable for the asset or liability; inputs derived principally from or corroborated by observable market data by or other means including certified appraisals. 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.
The following table presents the assets reported on the consolidated statements of financial condition at their fair value on a recurring basis as of December 31, 2024, and December 31, 2023, by level within the fair value hierarchy. No liabilities were carried at fair value. As required by the accounting standards, 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.
(Dollars in thousands)
Level I
Level II
Level III
Total
Assets:
December 31,
Securities available-for-sale
U.S. Treasury securities
$
-
$
13,414
$
-
$
13,414
U.S. Government agencies
-
5,698
-
5,698
Mortgage-backed securities of government
agencies
-
62,698
-
62,698
Asset-backed securities of government agencies
-
-
State and political subdivisions
-
14,246
-
14,246
Corporate bonds
-
28,980
-
28,980
Total available-for-sale securities
$
-
$
125,434
$
-
$
125,434
Equity securities
$
$
-
$
-
$
Assets:
December 31,
Securities available-for-sale
U.S. Treasury securities
$
-
$
17,689
$
-
$
17,689
U.S. Government agencies
-
13,152
-
13,152
Mortgage-backed securities of government
agencies
-
65,045
-
65,045
Asset-backed securities of government agencies
-
-
State and political subdivisions
-
16,586
-
16,586
Corporate bonds
-
27,085
-
27,085
Total available-for-sale securities
$
-
$
140,080
$
-
$
140,080
Equity securities
$
$
-
$
-
$
NOTE 15 - FAIR VALUES OF FINANCIAL INSTRUMENTS
The estimated fair values of recognized financial instruments carried at amortized cost as of December 31 were as follows:
Carrying
Total Fair
(Dollars in thousands)
Value
Level I
Level II
Level III
Value
Financial assets
Securities held-to-maturity
$
204,309
$
-
$
172,603
$
-
$
172,603
Loans held for sale
-
-
Net loans
730,046
-
-
691,816
691,816
Mortgage servicing rights
-
-
Financial liabilities
Deposits
$
1,044,887
$
801,634
$
-
$
242,413
$
1,044,047
Other borrowings
1,266
-
-
1,111
1,111
Carrying
Total Fair
(Dollars in thousands)
Value
Level I
Level II
Level III
Value
Financial assets
Securities held-to-maturity
$
226,279
$
-
$
194,730
$
-
$
194,730
Net loans
694,797
-
-
663,510
663,510
Mortgage servicing rights
-
-
Financial liabilities
Deposits
$
1,027,427
835,847
-
193,126
1,028,973
Other borrowings
1,754
$
-
$
-
$
1,546
$
1,546
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 1 fair value that approximates their carrying value.
NOTE 16 - ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table presents the changes in accumulated other comprehensive loss by component net of tax for the years ended December 31, 2024, and 2023:
(Dollars in thousands)
Pretax
Tax Effect
After-Tax
BALANCE AS OF DECEMBER 31, 2022
$
(16,354
)
$
3,435
$
(12,919
)
Unrealized holding gain on available-for-sale
securities arising during the period
3,168
(666
)
2,502
Amortization of held-to-maturity discount resulting
from transfer
(40
)
Total other comprehensive income
3,355
(706
)
2,649
BALANCE AS OF DECEMBER 31, 2023
$
(12,999
)
$
2,729
$
(10,270
)
Unrealized holding gain on available-for-sale
securities arising during the period
2,166
(455
)
1,711
Amortization of held-to-maturity discount resulting
from transfer
(37
)
Total other comprehensive income
2,342
(492
)
1,850
BALANCE AS OF DECEMBER 31, 2024
$
(10,657
)
$
2,237
$
(8,420
)
NOTE 17 - CONTINGENT LIABILITIES
In the normal course of business, the Company is subject to pending and threatened legal actions. Although, the Company is not able to predict the outcome of such actions, after reviewing pending and threatened actions, management believes that the outcome of any or all such actions will not have a material adverse effect on the results of operations or shareholders’ equity of the Company.
The Company has an employment agreement with an officer. Upon the occurrence of certain types of termination of employment, the Company may be required to make specified severance payments if termination occurs within a specified period of time, generally two years from the date of the agreement, or pursuant to certain change in control transactions.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.

---

ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
With the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) was performed, as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective.
Internal Control over Financial Reporting
Information contained in the Report on Management’s Assessment of Internal Control Over Financial Reporting in Item 8 of this Annual Report on Form 10-K is incorporated herein by reference
Changes in Internal Control over Financial Reporting
There have been no changes during the quarter ended December 31, 2024, in the Company’s internal controls over financial reporting (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, CSB’s 2024 internal control over financial reporting.

---

ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION.
None.

---

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
The information required by Item 401 of Regulation S-K concerning the directors of the Company and the nominees for election as directors of the Company at the Annual Meeting of Shareholders to be held on April 23, 2025 (the “2025 Annual Meeting”), is incorporated herein by reference from the information to be included under the captions “Proposal One - Election of Directors,” “Nominees for Election of Directors,” and “Directors Continuing in Office” in the Company’s definitive proxy statement relating to the 2025 Annual Meeting to be filed with the SEC (the “2025 Proxy Statement”) no later than 120 days after December 31, 2024. The information required by Item 401 of Regulation S-K concerning the executive officers of the Company is incorporated herein by reference from the information to be included under the caption “Executive Officers” in the 2025 Proxy Statement.
Code of Ethics
The Company has adopted a Code of Ethics that applies to its principal officers, including the Chief Executive Officer and Chief Financial Officer. The Company has posted its Code of Ethics on its website at www.csb1.com; select Investor Relations/Corporate Governance/Governance Documents. The Company plans to satisfy SEC disclosure requirements regarding any amendments to, or waiver of, the Code of Ethics relating to its Chief Executive Officer or Chief Financial Officer, and persons performing similar functions, by posting such information on the Company’s website or by making any necessary filings with the SEC. Any person may receive a copy of our Code of Ethics free of charge upon request by calling the Company during business hours or by sending a written request.
Procedures for Recommending Director Nominees
Information concerning the procedures by which shareholders may recommend nominees to the Company’s Board of Directors can be found under the caption, “Shareholder Recommendations” in the 2025 Proxy Statement.
Audit Committee
The information required by Items 407(d)(4) and (d)(5) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the sections, “Membership and Meetings of the Board and its Committees” and the subsection, “Committees of the Board of Directors - Audit Committee” in the 2025 Proxy Statement.
Insider Trading Policies and Procedures
The information required by Item 408(b) of Regulation S-K is filed as Exhibit 19 and incorporated herein by reference from the disclosure to be included under the section, "Insider Trading Arrangements and Policies" in the 2025 Proxy Statement.

---

ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION.
The information required by Item 402 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the sections, “Discussion of Executive Compensation Programs” and, “Executive Compensation and Other Information” and the subsection, “Directors’ Compensation” under the section captioned, “Membership and Meetings of the Board and its Committees” in the 2025 Proxy Statement.
The information required by Item 407(e)(4) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the section, “Compensation Committee Interlocks and Insider Participation” in the 2025 Proxy Statement.
The information required by Item 407(e)(5) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the section, “The Compensation Committee Report” in the 2025 Proxy Statement.
The information required by Item 402(x)(1) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the [section, “Discussion of Executive Compensation Programs” and the subsection, “Compensation Committee Decision-Making Process”] in the 2025 Proxy Statement.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Equity Compensation Plan Information
None.
Security Ownership of Certain Beneficial Owners and Management
The information required by Item 403 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the section, “Beneficial Ownership of Management and Certain Beneficial Owners” in the 2025 Proxy Statement.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required by Item 404 of Regulation S-K is incorporated herein by reference from the disclosure to be included under the section, “Certain Relationships and Related Transactions” in the 2025 Proxy Statement.
The information required by Item 407(a) of Regulation S-K is incorporated herein by reference from the disclosure to be included under the section, “Membership and Meetings of the Board and its Committees” in the 2025 Proxy Statement.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required by this Item 14 is incorporated herein by reference from the disclosure to be included under the section, “Independent Registered Public Accounting Firm Fees” and subsection, “Audit Committee Procedures for Pre-Approval of Services by the Independent Public Accounting Firm” in the 2025 Proxy Statement.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
a.The following documents are filed as part of this report and included under Item 8:
(1)
Financial Statements
Report of Independent Registered Public Accounting Firm (S.R. Snodgrass)
Consolidated Balance Sheets on December 31,2024 and 2023
Consolidated Statements of Income for the years ended December 31, 2024 and 2023
Consolidated Statements of Comprehensive Income for the years ended December 31, 2024 and 2023
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2024 and 2023
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023
Notes to Consolidated Financial Statements
(2)Financial Statement Schedules
All schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and have been omitted.
(3)Exhibits	
The documents listed in the Index to Exhibits that immediately precedes the "Signatures" pages of this Annual Report on Form 10-K are filed or furnished with this Annual Report on Form 10-K as exhibits or incorporated into this Annual Report on Form 10-K by reference.
b.Exhibits Required by Item 601 of Regulation S-K.
c.Financial Statement Schedules
Certain schedules have been omitted because the required information is included in the consolidated financial statements and notes thereto or because they are not applicable or not required.