Form 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2015

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-21714

 

 

CSB Bancorp, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Ohio   34-1687530

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

91 North Clay, P.O. Box 232, Millersburg, Ohio 44654

(Address of principal executive offices)

(330) 674-9015

(Registrant’s telephone number)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   ¨    Smaller reporting company   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

Indicate the number of shares outstanding of the registrant’s common stock, as of the latest practicable date.

 

Common stock, $6.25 par value

 

Outstanding at November 1, 2015:

2,739,405 common shares

 

 

 


Table of Contents

CSB BANCORP, INC.

FORM 10-Q

QUARTER ENDED September 30, 2015

Table of Contents

 

     Page  

Part I – Financial Information

  

ITEM 1 –   FINANCIAL STATEMENTS (Unaudited)

  

Consolidated Balance Sheets

     3   

Consolidated Statements of Income

     4   

Consolidated Statements of Comprehensive Income

     5   

Condensed Consolidated Statements of Changes in Shareholders’ Equity

     6   

Condensed Consolidated Statements of Cash Flows

     7   

Notes to Consolidated Financial Statements

     8   

ITEM 2 –    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     27   

ITEM 3 –   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     34   

ITEM 4 –   CONTROLS AND PROCEDURES

     35   

Part II – Other Information

  

ITEM 1 – Legal Proceedings

     36   

ITEM 1A – Risk Factors

     36   

ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds

     36   

ITEM 3 – Defaults upon Senior Securities

     36   

ITEM 4 – Mine Safety Disclosures

     36   

ITEM 5 – Other Information

     36   

ITEM 6 – Exhibits

     37   

Signatures

     38   

 

2


Table of Contents

CSB BANCORP, INC.

PART I – FINANCIAL INFORMATION

ITEM 1. – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

     September 30,     December 31,  

(Dollars in thousands)

   2015     2014  

ASSETS

    

Cash and cash equivalents

    

Cash and due from banks

   $ 11,940      $ 15,310   

Interest-earning deposits in other banks

     27,896        28,613   
  

 

 

   

 

 

 

Total cash and cash equivalents

     39,836        43,923   
  

 

 

   

 

 

 

Securities

    

Available-for-sale, at fair value

     115,231        100,108   

Held-to-maturity; fair value of $37,259 in 2015 and $38,950 in 2014

     36,621        38,316   

Restricted stock, at cost

     4,614        4,614   
  

 

 

   

 

 

 

Total securities

     156,466        143,038   
  

 

 

   

 

 

 

Loans held for sale

     140        75   

Loans

     412,974        410,903   

Less allowance for loan losses

     4,632        4,381   
  

 

 

   

 

 

 

Net loans

     408,342        406,522   
  

 

 

   

 

 

 

Premises and equipment, net

     8,290        8,286   

Core deposit intangible

     535        629   

Goodwill

     4,728        4,728   

Bank-owned life insurance

     10,016        9,815   

Accrued interest receivable and other assets

     4,028        3,965   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 632,381      $ 620,981   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

LIABILITIES

    

Deposits

    

Noninterest-bearing

   $ 146,001      $ 139,251   

Interest-bearing

     359,087        360,824   
  

 

 

   

 

 

 

Total deposits

     505,088        500,075   
  

 

 

   

 

 

 

Short-term borrowings

     50,823        46,627   

Other borrowings

     13,602        14,953   

Accrued interest payable and other liabilities

     2,364        1,876   
  

 

 

   

 

 

 

Total liabilities

     571,877        563,531   
  

 

 

   

 

 

 

SHAREHOLDERS’ EQUITY

    

Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares; outstanding 2,739,405 shares in 2015 and 2014

     18,629        18,629   

Additional paid-in capital

     9,884        9,884   

Retained earnings

     36,944        34,090   

Treasury stock at cost—241,197 shares in 2015 and 2014

     (4,871     (4,871

Accumulated other comprehensive loss

     (82     (282
  

 

 

   

 

 

 

Total shareholders’ equity

     60,504        57,450   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   $ 632,381      $ 620,981   
  

 

 

   

 

 

 

See notes to unaudited consolidated financial statements.

 

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Table of Contents

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

     Three Months Ended      Nine Months Ended  
     September 30,      September 30,  

(Dollars in thousands, except per share data)

   2015      2014      2015      2014  

INTEREST AND DIVIDEND INCOME

           

Loans, including fees

   $ 4,612       $ 4,645       $ 13,930       $ 13,705   

Taxable securities

     683         661         2,041         2,182   

Nontaxable securities

     142         115         408         345   

Other

     25         14         58         23   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total interest and dividend income

     5,462         5,435         16,437         16,255   
  

 

 

    

 

 

    

 

 

    

 

 

 

INTEREST EXPENSE

           

Deposits

     271         291         815         884   

Short-term borrowings

     19         18         53         59   

Other borrowings

     104         129         312         372   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total interest expense

     394         438         1,180         1,315   
  

 

 

    

 

 

    

 

 

    

 

 

 

NET INTEREST INCOME

     5,068         4,997         15,257         14,940   

PROVISION FOR LOAN LOSSES

     —           123         389         458   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net interest income, after provision for loan losses

     5,068         4,874         14,868         14,482   
  

 

 

    

 

 

    

 

 

    

 

 

 

NONINTEREST INCOME

           

Service charges on deposit accounts

     315         324         916         937   

Trust services

     198         199         643         617   

Debit card interchange fees

     250         236         723         667   

Securities gains

     —           —           56         133   

Gain on sale of loans, net

     114         77         306         145   

Other income

     242         241         709         690   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest income

     1,119         1,077         3,353         3,189   
  

 

 

    

 

 

    

 

 

    

 

 

 

NONINTEREST EXPENSES

           

Salaries and employee benefits

     2,222         2,123         6,596         6,253   

Occupancy expense

     252         255         777         761   

Equipment expense

     166         180         497         549   

Professional and director fees

     173         132         665         528   

Franchise tax expense

     106         107         305         320   

Marketing and public relations

     111         79         286         285   

Software expense

     198         177         600         510   

Debit card expense

     102         107         310         296   

Telephone expense

     80         66         216         196   

Amortization of intangible assets

     31         32         94         97   

FDIC insurance expense

     90         90         272         267   

Other expenses

     413         422         1,248         1,233   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total noninterest expenses

     3,944         3,770         11,866         11,295   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     2,243         2,181         6,355         6,376   

FEDERAL INCOME TAX PROVISION

     687         674         1,940         1,931   
  

 

 

    

 

 

    

 

 

    

 

 

 

NET INCOME

   $ 1,556       $ 1,507       $ 4,415       $ 4,445   
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic and diluted net earnings per share

   $ 0.57       $ 0.55       $ 1.61       $ 1.62   
  

 

 

    

 

 

    

 

 

    

 

 

 

See notes to unaudited consolidated financial statements.

 

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CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  

(Dollars in thousands)

   2015     2014     2015     2014  

Net income

   $ 1,556      $ 1,507      $ 4,415      $ 4,445   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

        

Unrealized gains arising during the period

     704        —          86        1,356   

Amounts reclassified from accumulated other comprehensive income, held-to-maturity

     56        56        272        160   

Income tax effect

     (258     (19     (121     (515

Reclassification adjustment for gains on available-for- sale securities included in net income

     —          —          (56     (133

Income tax effect

     —          —          19        45   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income

     502        37        200        913   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

   $ 2,058      $ 1,544      $ 4,615      $ 5,358   
  

 

 

   

 

 

   

 

 

   

 

 

 

See notes to unaudited consolidated financial statements.

 

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Table of Contents

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  

(Dollars in thousands, except per share data)

   2015     2014     2015     2014  

Balance at beginning of period

   $ 58,966      $ 55,239      $ 57,450      $ 52,411   

Net income

     1,556        1,507        4,415        4,445   

Other comprehensive income

     502        37        200        913   

Stock options exercised 451 shares issued in 2014

     —          7        —          6   

Cash dividends declared

     (520     (520     (1,561     (1,505
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

   $ 60,504      $ 56,270      $ 60,504      $ 56,270   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared per share

   $ 0.19      $ 0.19      $ 0.57      $ 0.55   

See notes to unaudited consolidated financial statements.

 

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Table of Contents

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Nine Months Ended  
     September 30,  

(Dollars in thousands)

   2015     2014  

NET CASH FROM OPERATING ACTIVITIES

   $ 5,262      $ 5,100   

CASH FLOWS FROM INVESTING ACTIVITIES

    

Securities:

    

Proceeds from repayments, held-to-maturity

     11,917        6,356   

Proceeds from maturities and repayments, available-for-sale

     26,684        17,604   

Purchases, available-for-sale

     (43,617     (16,054

Purchases, held-to-maturity

     (10,000     —     

Proceeds from sale of available-for-sale securities

     1,576        2,483   

Proceeds from redemption of restricted stock

     —          850   

Loan originations, net of repayments

     (2,197     (31,071

Property, equipment, and software acquisitions

     (529     (376
  

 

 

   

 

 

 

Net cash used in investing activities

     (16,166     (20,208
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

    

Net change in deposits

     5,013        5,597   

Net change in short-term borrowings

     4,196        42   

Proceeds from other borrowings

     —          5,000   

Repayment of other borrowings

     (1,351     (341

Cash dividends paid

     (1,041     (985

Stock options exercised

     —          6   
  

 

 

   

 

 

 

Net cash provided by financing activities

     6,817        9,319   
  

 

 

   

 

 

 

NET DECREASE IN CASH AND CASH EQUIVALENTS

     (4,087     (5,789

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

     43,923        42,599   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

   $ 39,836      $ 36,810   
  

 

 

   

 

 

 

SUPPLEMENTAL DISCLOSURES

    

Cash paid during the year for:

    

Interest

   $ 1,187      $ 1,333   

Income taxes

     1,430        1,775   

Noncash financing activities:

    

Dividends declared

     520        520   

See notes to unaudited consolidated financial statements.

 

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Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying condensed consolidated financial statements include the accounts of CSB Bancorp, Inc. and its wholly-owned subsidiaries, The Commercial and Savings Bank (the “Bank”) and CSB Investment Services, LLC (together referred to as the “Company” or “CSB”). All significant intercompany transactions and balances have been eliminated in consolidation.

The condensed consolidated financial statements have been prepared without audit. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the Company’s financial position at September 30, 2015, and the results of operations and changes in cash flows for the periods presented have been made.

Certain information and footnote disclosures typically included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been omitted. The Annual Report for CSB for the year ended December 31, 2014, contains Consolidated Financial Statements and related footnote disclosures, which should be read in conjunction with the accompanying Consolidated Financial Statements. The results of operations for the period ended September 30, 2015 are not necessarily indicative of the operating results for the full year or any future interim period.

Certain items in the prior-year financial statements were reclassified to conform to the current-year presentation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this Update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method. The Company has included the disclosures related to this Update in Note 3.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The Update’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this update specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This Update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is evaluating the effect of adopting this new accounting Update.

In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this Update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. For repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments also require enhanced disclosures. The accounting changes in this Update are effective for the first interim or annual period beginning after December

 

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CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED)

 

15, 2014. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application is prohibited. The disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. The disclosures are not required to be presented for comparative periods before the effective date. The company has included the disclosures related to this Update in Note 4.

In January 2015, the FASB issued ASU 2015-01, Income Statement – Extraordinary and Unusual Items, as part of its initiative to reduce complexity in accounting standards. This Update eliminates from U.S. GAAP the concept of extraordinary items. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity may also apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. This Update is not expected to have a significant impact on the Company’s financial statements.

In April 2015, the FASB issued ASU 2015-05, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40), as part of its initiative to reduce complexity in accounting standards. This guidance will help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The amendments in this Update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. For public business entities, the FASB decided that the amendments will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. For all other entities, the amendments will be effective for annual periods beginning after December 15, 2015, and interim periods in annual periods beginning after December 15, 2016. Early adoption is permitted for all entities. This Update is not expected to have a significant impact on the Company’s financial statements.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The amendments in this Update represent changes to clarify the FASB Accounting Standards Codification (“Codification”), correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Transition guidance varies based on the amendments in this Update. The amendments in this Update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon the issuance of this Update. This Update is not expected to have a significant impact on the Company’s financial statements.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606). The amendments in this Update defer the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. All other entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is evaluating the effect of adopting this new accounting Update.

 

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CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SECURITIES

Securities consist of the following at September 30, 2015 and December 31, 2014:

 

(Dollars in thousands)

   Amortized
cost
     Gross
unrealized
gains
     Gross
unrealized
losses
     Fair value  

September 30, 2015

           

Available-for-sale

           

U.S. Treasury security

   $ 1,002       $ 2       $ —         $ 1,004   

U.S. Government agencies

     21,444         45         50         21,439   

Mortgage-backed securities of government agencies

     48,368         908         109         49,167   

Other mortgage-backed securities

     113         —           —           113   

Asset-backed securities of government agencies

     1,498         —           66         1,432   

State and political subdivisions

     25,006         330         101         25,235   

Corporate bonds

     16,767         23         14         16,776   

Equity securities

     53         12         —           65   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale

     114,251         1,320         340         115,231   

Held-to-maturity securities

           

U.S. Government agencies

     17,492         445         18         17,919   

Mortgage-backed securities of government agencies

     19,129         240         29         19,340   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total held-to-maturity

     36,621         685         47         37,259   

Restricted stock

     4,614         —           —           4,614   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

   $ 155,486       $ 2,005       $ 387       $ 157,104   
  

 

 

    

 

 

    

 

 

    

 

 

 

December 31, 2014

           

Available-for-sale

           

U.S. Treasury security

   $ 1,004       $ —         $ 4       $ 1,000   

U.S. Government agencies

     25,228         6         155         25,079   

Mortgage-backed securities of government agencies

     47,696         730         79         48,347   

Other mortgage-backed securities

     139         2         —           141   

Asset-backed securities of government agencies

     2,606         3         5         2,604   

State and political subdivisions

     17,878         433         44         18,267   

Corporate bonds

     4,503         40         1         4,542   

Equity securities

     106         22         —           128   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale

     99,160         1,236         288         100,108   

Held-to-maturity securities

           

U.S. Government agencies

     16,343         294         2         16,635   

Mortgage-backed securities of government agencies

     21,973         398         56         22,315   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total held-to-maturity

     38,316         692         58         38,950   

Restricted stock

     4,614         —           —           4,614   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

   $ 142,090       $ 1,928       $ 346       $ 143,672   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

10


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SECURITIES (CONTINUED)

 

The amortized cost and fair value of debt securities at September 30, 2015, 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

   $ 9,545       $ 9,554   

Due after one through five years

     23,507         23,672   

Due after five through ten years

     23,341         23,477   

Due after ten years

     57,805         58,463   
  

 

 

    

 

 

 

Total debt securities available-for-sale

   $ 114,198       $ 115,166   
  

 

 

    

 

 

 

Held-to-maturity:

     

Due in one year or less

   $ —         $ —     

Due after one through five years

     —           —     

Due after five through ten years

     11,777         11,959   

Due after ten years

     24,844         25,300   
  

 

 

    

 

 

 

Total debt securities held-to-maturity

   $ 36,621       $ 37,259   
  

 

 

    

 

 

 

Securities with a fair market value of approximately $96.1 million and $88.4 million were pledged at September 30, 2015 and December 31, 2014, respectively, to secure public deposits, as well as other deposits and borrowings as required or permitted by law.

Restricted stock primarily consists of investments in Federal Home Loan Bank of Cincinnati (FHLB) and Federal Reserve Bank stock. The Bank’s investment in FHLB stock amounted to approximately $4.1 million at September 30, 2015 and December 31, 2014. Federal Reserve Bank stock was $471 thousand at September 30, 2015 and December 31, 2014.

The following table shows the proceeds from sales of available-for-sale securities and the gross realized gains and losses on the sales of those securities that have been included in earnings as a result of the sales.

 

     Three months ended      Nine months ended  
     September 30,      September 30,  

(Dollars in thousands)

   2015      2014      2015      2014  

Proceeds

   $ —         $ —         $ 1,576       $ 2,483   

Realized gains

     —           —           56         133   

Realized losses

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Net securities gains

   $ —         $ —         $ 56       $ 133   
  

 

 

    

 

 

    

 

 

    

 

 

 

There were no income tax provisions from realized gains for the three month periods ending September 30, 2015 and 2014, respectively. The income tax provision applicable to realized gains amounted to $19 thousand and $45 thousand for the nine month periods ending September 30, 2015 and 2014, respectively. There were no tax benefits recognized from realized losses in 2015 or 2014.

 

11


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 2 – SECURITIES (CONTINUED)

 

The following table presents gross unrealized losses and fair value of securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2015 and December 31, 2014:

 

     Securities in a continuous unrealized loss position  
     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
 

September 30, 2015

                 

Available-for-sale

                 

U.S. Government agencies

   $ 25       $ 5,668       $ 25       $ 4,975       $ 50       $ 10,643   

Mortgage-backed securities of government agencies

     109         6,864         —           —           109         6,864   

Asset-backed securities of government agencies

     66         1,432         —           —           66         1,432   

State and political subdivisions

     90         4,848         11         684         101         5,532   

Corporate bonds

     14         5,643         —           —           14         5,643   

Held-to-maturity

                 

U.S. Government agencies

     18         1,982         —           —           18         1,982   

Mortgage-backed securities of government agencies

     29         7,674         —           —           29         7,674   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total temporarily impaired securities

   $ 351       $ 34,111       $ 36       $ 5,659       $ 387       $ 39,770   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

December 31, 2014

                 

Available-for-sale

                 

U.S. Treasury security

   $ 4       $ 1,000       $ —         $ —         $ 4       $ 1,000   

U.S. Government agencies

     12         5,188         143         5,856         155         11,044   

Mortgage-backed securities of government agencies

     40         6,348         39         4,939         79         11,287   

Asset-backed securities of government agencies

     5         1,603         —           —           5         1,603   

State and political subdivisions

     13         1,300         31         1,416         44         2,716   

Corporate bonds

     1         499         —           —           1         499   

Held-to-maturity

                 

U.S. Government agencies

     2         998         —           —           2         998   

Mortgage-backed securities of government agencies

     —           —           56         9,265         56         9,265   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total temporarily impaired securities

   $ 77       $ 16,936       $ 269       $ 21,476       $ 346       $ 38,412   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

There were forty-two (42) securities in an unrealized loss position at September 30, 2015, eight (8) of which were in a continuous loss position for twelve months or more. At least quarterly, the Company conducts a comprehensive security-level impairment assessment. The assessments are based on the nature of the securities, the extent and duration of the securities in an unrealized loss position, the extent and duration of the loss and management’s intent to sell or if it is more likely than not that management will be required to sell a security before recovery of its amortized cost basis, which may be maturity. Management believes the Company will fully recover the cost of these securities. It does not intend to sell these securities and likely will not be required to sell them before the anticipated recovery of the remaining amortized cost basis, which may be maturity. As a result, management concluded that these securities were not other-than-temporarily impaired at September 30, 2015.

 

12


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – LOANS

Loans consist of the following:

 

(Dollars in thousands)

   September 30, 2015      December 31, 2014  

Commercial

   $ 125,785       $ 123,813   

Commercial real estate

     140,210         139,695   

Residential real estate

     122,030         121,684   

Construction & land development

     15,188         17,446   

Consumer

     9,358         7,913   
  

 

 

    

 

 

 

Total loans before deferred costs

     412,571         410,551   

Deferred loan costs

     403         352   
  

 

 

    

 

 

 

Total Loans

   $ 412,974       $ 410,903   
  

 

 

    

 

 

 

Loan Origination/Risk Management

The Company has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.

Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and prudently expand its business. Underwriting standards are designed to promote relationship banking rather than transactional banking. The Company’s management examines current and occasionally projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers; however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may incorporate a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers.

Commercial real estate loans are subject to underwriting standards and processes similar to commercial loans, in addition to those of real estate loans. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Commercial real estate lending typically involves higher loan principal amounts and the repayment of these loans is largely dependent on the successful operation of the property securing the loan or the business conducted on the property securing the loan. Commercial real estate loans may be adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s commercial real estate portfolio are diverse in terms of type. This diversity helps reduce the Company’s exposure to adverse economic events that affect any single industry. Management monitors and evaluates commercial real estate loans based on collateral, geography and risk grade criteria. In addition, management tracks the level of owner-occupied commercial real estate loans versus non-owner occupied loans. At September 30, 2015 and December 31, 2014, approximately 76% and 77% of the outstanding principal balances of the Company’s commercial real estate loans were secured by owner-occupied properties.

With respect to loans to developers and builders that are secured by non-owner occupied properties, the Company generally requires the borrower to have had an existing relationship with the Company and have a proven record of success. Construction and land development loans are underwritten utilizing independent appraisal reviews, sensitivity analysis of absorption and lease rates and financial analysis of the developers and property owners. Construction and land development loans are generally based upon estimates of costs and value associated with the completed project. These estimates may be inaccurate.

 

13


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – LOANS (CONTINUED)

 

Construction and land development loans often involve the disbursement of substantial funds with repayment substantially dependent on the success of the ultimate project. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions and the availability of long-term financing.

The Company originates consumer loans utilizing a judgmental underwriting process. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed, jointly by line and staff personnel. This activity, coupled with relatively small loan amounts that are spread across many individual borrowers, minimizes risk.

The Company maintains an independent loan review department that reviews and validates the credit risk program on a periodic basis. Results of these reviews are presented to management. The loan review process complements and reinforces the risk identification and assessment decisions made by lenders and credit personnel, as well as the Company’s policies and procedures.

Loans serviced for others approximated $76.2 million and $70.6 million at September 30, 2015 and December 31, 2014, respectively.

Concentrations of Credit

Nearly all of the Company’s lending activity occurs within the state of Ohio, including the four (4) counties of Holmes, Stark, Tuscarawas and Wayne, as well as other markets. The majority of the Company’s loan portfolio consists of commercial and industrial and commercial real estate loans. As of September 30, 2015 and December 31, 2014, there were no concentrations of loans related to any single industry.

Allowance for Loan Losses

The following tables detail activity in the allowance for loan losses by portfolio segment for the three and nine month periods ended September 30, 2015 and 2014. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

The changes in the provision for loan losses for the three and nine month periods of 2015 related to commercial and industrial loans were primarily due to the increase in a specific reserve for one commercial relationship as well as the increase in the qualitative economic factors applied to loans in this category. The decrease in the provision related to commercial real estate loans was primarily due to the overall improved credit quality of the loans in this category.

The increase in the provision for possible loan losses during 2014 related to commercial and industrial loans was due to the increase in specific allocation amounts related to impaired loans and also the increase in loan balances. The increase in the provision related to commercial real estate loans was affected by an increase in loan balances and charge-offs that occurred during the nine months ended September 30, 2014. The decrease in the provision related to commercial real estate loans during the three months ended September 30, 2014, was due to the leveling off of loan balances in this category, as well as the payoff of an impaired loan. The decrease in the provision related to residential real estate loans was affected by the decrease in the specific allocation amounts related to impaired residential real estate loans during the three and nine months ended September 30, 2014. The decrease in the provision related to construction and land development loans relates primarily to the decrease in loan volume due to completion of construction projects and loans being moved to permanent financing.

 

14


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – LOANS (CONTINUED)

 

(Dollars in thousands)

   Commercial     Commercial
Real Estate
    Residential
Real Estate
    Construction
& Land
Development
    Consumer     Unallocated     Total  

Three months ended September 30, 2015

              

Beginning balance

   $ 1,354      $ 1,459      $ 994      $ 125      $ 74      $ 650      $ 4,656   

Provision for possible loan losses

     461        (203     69        —          24        (351     —     

Charge-offs

     (85     —          —          —          (10       (95

Recoveries

     63        3        1        —          4          71   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Net charge-offs

     (22     3        1        —          (6       (24
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 1,793      $ 1,259      $ 1,064      $ 125      $ 92      $ 299      $ 4,632   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nine months ended September 30, 2015

              

Beginning balance

   $ 1,289      $ 1,524      $ 1,039      $ 142      $ 60      $ 327      $ 4,381   

Provision for possible loan losses

     519        (238     85        (17     68        (28     389   

Charge-offs

     (90     (40     (70     —          (44       (244

Recoveries

     75        13        10        —          8          106   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Net charge-offs

     (15     (27     (60     —          (36       (138
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 1,793      $ 1,259      $ 1,064      $ 125      $ 92      $ 299      $ 4,632   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Three months ended September 30, 2014

              

Beginning balance

   $ 1,322      $ 2,087      $ 1,158      $ 51      $ 43      $ 402      $ 5,063   

Provision for possible loan losses

     398        (240     (157     (11     45        88        123   

Charge-offs

     (5     (1     (1     —          (2       (9

Recoveries

     2        1        5        —          3          11   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Net charge-offs

     (3     —          4        —          1          2   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 1,717      $ 1,847      $ 1,005      $ 40      $ 89      $ 490      $ 5,188   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nine months ended September 30, 2014

              

Beginning balance

   $ 1,219      $ 1,872      $ 1,205      $ 178      $ 91      $ 520      $ 5,085   

Provision for possible loan losses

     512        328        (206     (138     (8     (30     458   

Charge-offs

     (24     (354     (6     —          (5       (389

Recoveries

     10        1        12        —          11          34   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Net charge-offs

     (14     (353     6        —          6          (355
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

   $ 1,717      $ 1,847      $ 1,005      $ 40      $ 89      $ 490      $ 5,188   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

15


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – LOANS (CONTINUED)

 

The following table presents the balance in the allowance for loan losses and the ending loan balances by portfolio segment and based on the impairment method as of September 30, 2015 and December 31, 2014:

 

(Dollars in thousands)

   Commercial      Commercial
Real Estate
     Residential
Real Estate
     Construction      Consumer      Unallocated      Total  

September 30, 2015

                    

Allowance for loan losses:

                    

Individually evaluated for impairment

   $ 300       $ 67       $ 28       $ —         $ —         $ —         $ 395   

Collectively evaluated for impairment

     1,493         1,192         1,036         125         92         299         4,237   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total ending allowance balance

   $ 1,793       $ 1,259       $ 1,064       $ 125       $ 92       $ 299       $ 4,632   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Loans:

                    

Loans individually evaluated for impairment

   $ 6,032       $ 1,083       $ 1,621       $ —         $ —            $ 8,736   

Loans collectively evaluated for impairment

     119,753         139,127         120,409         15,188         9,358            403,835   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

       

 

 

 

Total ending loans balance

   $ 125,785       $ 140,210       $ 122,030       $ 15,188       $ 9,358          $ 412,571   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

       

 

 

 

December 31, 2014

                    

Allowance for loan losses:

                    

Individually evaluated for impairment

   $ —         $ 109       $ 75       $ —         $ —         $ —         $ 184   

Collectively evaluated for impairment

     1,289         1,415         964         142         60         327         4,197   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total ending allowance balance

   $ 1,289       $ 1,524       $ 1,039       $ 142       $ 60       $ 327       $ 4,381   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Loans:

                    

Loans individually evaluated for impairment

   $ 5,922       $ 1,679       $ 1,612       $ —         $ —            $ 9,213   

Loans collectively evaluated for impairment

     117,891         138,016         120,072         17,446         7,913            401,338   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

       

 

 

 

Total ending loans balance

   $ 123,813       $ 139,695       $ 121,684       $ 17,446       $ 7,913          $ 410,551   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

       

 

 

 

 

16


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – LOANS (CONTINUED)

 

The following table presents loans individually evaluated for impairment by class of loans as of September 30, 2015 and December 31, 2014:

 

(Dollars in thousands)

   Unpaid
Principal
Balance
     Recorded
Investment
with no
Allowance
     Recorded
Investment
with
Allowance
     Total
Recorded
Investment
     Related
Allowance
 

September 30, 2015

              

Commercial

   $ 6,439       $ 5,741       $ 307       $ 6,048       $ 300   

Commercial real estate

     1,274         488         594         1,082         67   

Residential real estate

     1,804         822         801         1,623         28   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans

   $ 9,517       $ 7,051       $ 1,702       $ 8,753       $ 395   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

December 31, 2014

              

Commercial

   $ 7,011       $ 5,889       $ 37       $ 5,926       $ —     

Commercial real estate

     1,836         950         728         1,678         109   

Residential real estate

     1,721         885         730         1,615         75   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total impaired loans

   $ 10,568       $ 7,724       $ 1,495       $ 9,219       $ 184   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated.

 

     Three months      Nine months  
     ended September 30,      ended September 30,  
(Dollars in thousands)    2015      2014      2015      2014  

Average recorded investment:

           

Commercial

   $ 5,667       $ 7,148       $ 5,887       $ 6,780   

Commercial real estate

     1,306         2,811         1,537         3,328   

Residential real estate

     1,698         1,775         1,682         1,832   
  

 

 

    

 

 

    

 

 

    

 

 

 

Average recorded investment in impaired loans

   $ 8,671       $ 11,734       $ 9,106       $ 11,940   
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest income recognized:

           

Commercial

   $ 58       $ 53       $ 163       $ 156   

Commercial real estate

     5         6         14         76   

Residential real estate

     14         15         49         46   
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest income recognized on a cash basis on impaired loans

   $ 77       $ 74       $ 226       $ 278   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

17


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – LOANS (CONTINUED)

 

The following table presents the aging of past due loans and nonaccrual loans as of September 30, 2015 and December 31, 2014 by class of loans:

 

(Dollars in thousands)

   Current      30 - 59
Days Past
Due
     60 - 89
Days Past
Due
     90 Days +
Past Due
     Non-
Accrual
     Total Past
Due and
Non-
Accrual
     Total Loans  

September 30, 2015

                    

Commercial

   $ 125,306       $ 262       $ 14       $ —         $ 203       $ 479       $ 125,785   

Commercial real estate

     139,240         62         —           —           908         970         140,210   

Residential real estate

     120,595         437         91         154         753         1,435         122,030   

Construction & land development

     15,188         —           —           —           —           —           15,188   

Consumer

     9,220         100         38         —           —           138         9,358   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Loans

   $ 409,549       $ 861       $ 143       $ 154       $ 1,864       $ 3,022       $ 412,571   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

December 31, 2014

                    

Commercial

   $ 122,283       $ 362       $ 96       $ 1       $ 1,071       $ 1,530       $ 123,813   

Commercial real estate

     137,683         174         104         —           1,734         2,012         139,695   

Residential real estate

     120,025         424         92         280         863         1,659         121,684   

Construction & land development

     17,431         —           15         —           —           15         17,446   

Consumer

     7,798         73         42         —           —           115         7,913   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total Loans

   $ 405,220       $ 1,033       $ 349       $ 281       $ 3,668       $ 5,331       $ 410,551   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

 

18


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CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – LOANS (CONTINUED)

 

Troubled Debt Restructurings

All troubled debt restructurings (“TDR’s) are individually evaluated for impairment and a related allowance is recorded, as needed. Loans whose terms have been modified as TDR’s totaled $7.6 million as of September 30, 2015, and $6.8 million as of December 31, 2014, with $33 thousand and $88 thousand of specific reserves allocated to those loans, respectively. At September 30, 2015, $7.1 million of the loans classified as TDR’s were performing in accordance with their modified terms. Of the remaining $423 thousand, all were in nonaccrual of interest status.

The Company held no foreclosed real estate as of September 30, 2015 or December 31, 2014. Consumer mortgage loans in the process of foreclosure were $272 thousand at September 30, 2015 and $139 thousand at December 31, 2014.

The following table presents loans restructured during the three and nine month periods ended September 30, 2015 and 2014.

 

(Dollars in thousands)

   Number of
loans
restructured
     Pre-
Modification
Recorded
Investment
     Post-
Modification
Recorded
Investment
 

For the Three Months Ended September 30, 2015

        

Commercial

     1       $ 148       $ 148   
  

 

 

    

 

 

    

 

 

 

Total Restructured Loans

     1       $ 148       $ 148   
  

 

 

    

 

 

    

 

 

 

For the Nine Months Ended September 30, 2015

        

Commercial

     1       $ 148       $ 148   

Residential Real Estate

     4         295         295   
  

 

 

    

 

 

    

 

 

 

Total Restructured Loans

     5       $ 443       $ 443   
  

 

 

    

 

 

    

 

 

 

For the Nine Months Ended September 30, 2014

        

Residential Real Estate

     1       $ 84       $ 84   
  

 

 

    

 

 

    

 

 

 

Total Restructured Loans

     1       $ 84       $ 84   
  

 

 

    

 

 

    

 

 

 

The loans restructured were modified by changing the monthly payment to interest only. No principal reduction was made. None of the loans that were restructured in 2013 or 2014 have subsequently defaulted in the three or nine month periods ended September 30, 2015 and 2014. There were no TDR’s in the three month period ended September 30, 2014.

 

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Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – LOANS (CONTINUED)

 

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis includes commercial loans with an outstanding balance greater than $300 thousand. This analysis is performed on an annual basis. The Company uses the following definitions for risk ratings:

Pass. Loans classified as pass (Acceptable, Low Acceptable or Pass Watch) may exhibit a wide array of characteristics but at minimum represent an acceptable risk to the Bank. Borrowers in this rating may have leveraged but acceptable balance sheet positions, satisfactory asset quality, and stable to favorable sales and earnings trends, acceptable liquidity and adequate cash flow. Loans are considered fully collectible and require an average amount of administration. While generally adhering to credit policy, these loans may exhibit occasional exceptions that do not result in undue risk to the Bank. Borrowers are generally capable of absorbing setbacks, financial and otherwise, without the threat of failure.

Special Mention. Loans classified as special mention have material weaknesses that deserve management’s close attention. If left uncorrected, these weaknesses may result in deterioration of the repayment prospects for the loan 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 that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and 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. Loans listed as not rated are either less than $300 thousand or are included in groups of homogeneous loans. Based on the most recent analysis performed, the risk category of loans by class is as follows as of September 30, 2015 and December 31, 2014:

 

(Dollars in thousands)

   Pass      Special
Mention
     Substandard      Doubtful      Not Rated      Total  

September 30, 2015

                 

Commercial

   $ 114,408       $ 2,898       $ 7,806       $ —         $ 673       $ 125,785   

Commercial real estate

     132,546         3,501         3,206         —           957         140,210   

Residential real estate

     192         —           428         —           121,410         122,030   

Construction & land development

     12,221         989         —           —           1,978         15,188   

Consumer

     —           —           —           —           9,358         9,358   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 259,367       $ 7,388       $ 11,440       $ —         $ 134,376       $ 412,571   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

December 31, 2014

                 

Commercial

   $ 112,467       $ 3,809       $ 6,690       $ —         $ 847       $ 123,813   

Commercial real estate

     129,792         4,898         3,634         —           1,371         139,695   

Residential real estate

     209         —           39         —           121,436         121,684   

Construction & land development

     13,889         1,579         —           —           1,978         17,446   

Consumer

     —           —           —           —           7,913         7,913   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 256,357       $ 10,286       $ 10,363       $ —         $ 133,545       $ 410,551   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

20


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 3 – LOANS (CONTINUED)

 

The following table presents loans that are not rated by class of loans as of September 30, 2015 and December 31, 2014. Nonperforming loans include loans past due 90 days or more and loans on nonaccrual of interest status.

 

(Dollars in thousands)

   Performing      Non-Performing      Total  

September 30, 2015

        

Commercial

   $ 673       $ —         $ 673   

Commercial real estate

     957         —           957   

Residential real estate

     120,538         872         121,410   

Construction & land development

     1,978         —           1,978   

Consumer

     9,358         —           9,358   
  

 

 

    

 

 

    

 

 

 

Total

   $ 133,504       $ 872       $ 134,376   
  

 

 

    

 

 

    

 

 

 

December 31, 2014

        

Commercial

   $ 847       $ —         $ 847   

Commercial real estate

     1,371         —           1,371   

Residential real estate

     120,332         1,104         121,436   

Construction & land development

     1,978         —           1,978   

Consumer

     7,913         —           7,913   
  

 

 

    

 

 

    

 

 

 

Total

   $ 132,441       $ 1,104       $ 133,545   
  

 

 

    

 

 

    

 

 

 

NOTE 4 – SHORT-TERM BORROWINGS

The following table provides additional detail regarding repurchase agreements accounted for as secured borrowings.

 

     Overnight and Continuous  
     September 30,      December 31,  

(Dollars in thousands)

   2015      2014  

Securities of U.S. Government Agencies pledged

   $ 51,052       $ 46,842   

Repurchase agreements

   $ 50,823       $ 46,627   

NOTE 5 – FAIR VALUE MEASUREMENTS

The Company provides disclosures about assets and liabilities carried at fair value. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. The three broad levels of the fair value hierarchy are described below:

 

Level I:    Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level II:    Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by corroborated or other means. If the asset or liability has a specified (contractual) term, the Level II input must be observable for substantially the full term of the asset or liability.
Level III:    Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

21


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 5- FAIR VALUE MEASUREMENTS (CONTINUED)

 

The following table presents the assets reported on the Consolidated Balance Sheet at their fair value as of September 30, 2015 and December 31, 2014 by level within the fair value hierarchy. No liabilities are carried at fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Equity securities 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.

 

(Dollars in thousands)

   Level I      Level II      Level III      Total  

September 30, 2015

           

Assets:

  

Securities available-for-sale

           

U.S. Treasury security

   $ 1,004       $ —         $ —         $ 1,004   

U.S. Government agencies

     —           21,439         —           21,439   

Mortgage-backed securities of government agencies

     —           49,167         —           49,167   

Other mortgage-backed securities

     —           113         —           113   

Asset-backed securities of government agencies

     —           1,432         —           1,432   

State and political subdivisions

     —           25,235         —           25,235   

Corporate bonds

     —           16,776         —           16,776   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total debt securities

     1,004         114,162         —           115,166   

Equity securities

     65         —           —           65   

Loans held for sale

     140         —           —           140   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 1,209       $ 114,162       $ —         $ 115,371   
  

 

 

    

 

 

    

 

 

    

 

 

 

December 31, 2014

           

Assets:

           

Securities available-for-sale

           

U.S. Treasury security

   $ 1,000       $ —         $ —         $ 1,000   

U.S. Government agencies

     —           25,079         —           25,079   

Mortgage-backed securities of government agencies

     —           48,347         —           48,347   

Other mortgage-backed securities

     —           141         —           141   

Asset-backed securities of government agencies

     —           2,604         —           2,604   

State and political subdivisions

     —           18,267         —           18,267   

Corporate bonds

     —           4,542         —           4,542   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total debt securities

     1,000         98,980         —           99,980   

Equity securities

     128         —           —           128   

Loans held for sale

     75         —           —           75   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total available-for-sale securities

   $ 1,203       $ 98,980       $ —         $ 100,183   
  

 

 

    

 

 

    

 

 

    

 

 

 

The following table presents the assets measured on a nonrecurring basis on the Consolidated Balance Sheets at their fair value as of September 30, 2015 and December 31, 2014, by level within the fair value hierarchy. Impaired loans are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral that secure the impaired loans include: quoted market prices for identical assets classified as Level I inputs; and observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.

 

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Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 5- FAIR VALUE MEASUREMENTS (CONTINUED)

 

(Dollars in thousands)

   Level I      Level II      Level III      Total  

September 30, 2015

           

Assets measured on a nonrecurring basis:

  

Impaired loans

   $ —         $ —         $ 8,341       $ 8,341   

December 31, 2014

           

Assets measured on a nonrecurring basis:

  

Impaired loans

   $ —         $ —         $ 9,029       $ 9,029   

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level III inputs to determine fair value:

 

     Quantitative Information about Level III Fair Value Measurements
     Fair Value
Estimate
    

Valuation Techniques

  

Unobservable Input

  

Range (Weighted
Average)

(Dollars in thousands)                      

September 30, 2015

           

Impaired loans

   $ 7,306       Discounted cash flow    Remaining term Discount rate    1 mo to 30 yrs (62 months) 3.1% to 9.8% (4.3%)
     1,035       Appraisal of collateral (1)    Appraisal adjustments (2) Liquidation expense (2)    0% to -50% (-26%) -10% (-10%)

December 31, 2014

           

Impaired loans

   $ 6,539       Discounted cash flow    Remaining term Discount rate    2 mos to 28 yrs (62 mos) 3.1% to 8.3% (4.6%)
     2,490       Appraisal of collateral (1)    Appraisal adjustments (2) Liquidation expense (2)    -20% to -25% (-24%) -10% (-10%)

 

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various inputs which are not identifiable.
(2) Appraisals may be adjusted by management for qualitative factors such as estimated liquidation expenses. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

 

23


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 6 – FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of recognized financial instruments as of September 30, 2015 and December 31, 2014 are as follows:

 

(Dollars in thousands)

   Carrying
Value
     Level 1      Level II      Level III      Total Fair
Value
 

September 30, 2015

              

Financial assets:

              

Cash and cash equivalents

   $ 39,836       $ 39,836       $ —         $ —         $ 39,836   

Securities available-for-sale

     115,231         1,069         114,162         —           115,231   

Securities held-to-maturity

     36,621         —           37,259         —           37,259   

Restricted stock

     4,614         4,614         —           —           4,614   

Loans held-for-sale

     140         140         —           —           140   

Net loans

     408,342         —           —           413,814         413,814   

Bank-owned life insurance

     10,016         10,016         —           —           10,016   

Accrued interest receivable

     1,726         1,726         —           —           1,726   

Mortgage servicing rights

     245         —           —           245         245   

Financial liabilities:

              

Deposits

   $ 505,088       $ 380,929       $ —         $ 124,811       $ 505,740   

Short-term borrowings

     50,823         50,823         —           —           50,823   

Other borrowings

     13,602         —           —           14,027         14,027   

Accrued interest payable

     78         78         —           —           78   

December 31, 2014

              

Financial assets:

              

Cash and cash equivalents

   $ 43,923       $ 43,923       $ —         $ —         $ 43,923   

Securities available-for-sale

     100,108         1,128         98,980         —           100,108   

Securities held-to-maturity

     38,316         —           38,950         —           38,950   

Restricted stock

     4,614         4,614         —           —           4,614   

Loans held-for-sale

     75         75         —           —           75   

Net loans

     406,522         —           —           411,168         411,168   

Bank-owned life insurance

     9,815         9,815         —           —           9,815   

Accrued interest receivable

     1,329         1,329         —           —           1,329   

Mortgage servicing rights

     222         —           —           222         222   

Financial liabilities:

              

Deposits

   $ 500,075       $ 372,312       $ —         $ 128,445       $ 500,757   

Short-term borrowings

     46,627         46,627         —           —           46,627   

Other borrowings

     14,953         —           —           15,348         15,348   

Accrued interest payable

     84         84         —           —           84   

For purposes of the above disclosures of estimated fair value, the following assumptions are used:

Cash and cash equivalents; Loans held for sale; Accrued interest receivable; Short-term borrowings and Accrued interest payable

The fair value of the above instruments is considered to be carrying value, classified as Level I in the fair value hierarchy.

 

24


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 6 – FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

 

Securities

The fair value of securities available-for-sale and securities held-to-maturity which are measured on a recurring basis are determined primarily by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on securities’ relationship to other similar securities, classified as Level I or Level II in the fair value hierarchy.

Net loans

The fair value for loans is estimated by discounting future cash flows using current market inputs at which loans with similar terms and qualities would be made to borrowers of similar credit quality. Where quoted market prices were available, primarily for certain residential mortgage loans, such market rates were utilized as estimates for fair value. Fair value of non-accrual loans is based on carrying value, classified as Level III.

Bank-owned life insurance

The carrying amount of bank-owned life insurance is based on the cash surrender value of the policies and is a reasonable estimate of fair value, classified as Level I.

Restricted stock

Restricted stock includes Federal Home Loan Bank Stock and Federal Reserve Bank Stock. It is not practicable to determine the fair value of regulatory equity securities due to restrictions placed on their transferability. Fair value is based on carrying value, classified as Level I.

Mortgage servicing rights

The fair value of mortgage servicing rights is based on a valuation model that calculates the present value of estimated net servicing income. The valuation model incorporates discounted cash flow and repayment assumptions based on management’s best judgment. As a result, these rights are measured at fair value on a recurring basis and are classified within Level III of the fair value hierarchy.

Deposits

The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rates are estimated using market rates currently offered for similar instruments with similar remaining maturities, resulting in a Level III classification. Demand, savings, and money market deposit accounts are valued at the amount payable on demand as of quarter end, resulting in a Level I classification.

Other borrowings

The fair value of Federal Home Loan Bank advances are estimated using a discounted cash flow analysis based on the current borrowing rates for similar types of borrowings, resulting in a Level III classification.

The Company also has unrecognized financial instruments at September 30, 2015 and December 31, 2014. These financial instruments relate to commitments to extend credit and letters of credit. The aggregated contract amount of such financial instruments was approximately $134 million at September 30, 2015 and $128 million at December 31, 2014. Such amounts are also considered to be the estimated fair values.

The fair value estimates of financial instruments are made at a specific point in time based on relevant market information. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument over the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Since no ready market exists for a significant portion of the financial instruments, fair value estimates are largely based on judgments after considering such factors as future expected credit losses, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

 

25


Table of Contents

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 7- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in accumulated other comprehensive income (loss) by component net of tax for the three and nine month periods ended September 30, 2015 and 2014:

 

(Dollars in thousands)

   Pretax     Tax
(Expense)
Benefit
    After-tax     Affected Line
Item in the
Consolidated
Statements of
Income

Three months ended September 30, 2015

        

Balance as of June 30, 2015

   $ (885   $ 301      $ (584  

Unrealized holding gain on available-for-sale securities arising during the period

     704        (239     465     

Reclassify gain included in income

     —          —          —        (a, b)

Amortization of held-to-maturity discount resulting from transfer

     56        (19     37      (c)
  

 

 

   

 

 

   

 

 

   

Total other comprehensive income

     760        (258     502     
  

 

 

   

 

 

   

 

 

   

Balance as of September 30, 2015

   $ (125   $ 43      $ (82  
  

 

 

   

 

 

   

 

 

   

Nine months ended September 30, 2015

        

Balance as of December 31, 2014

   $ (427   $ 145      $ (282  

Unrealized holding gain on available-for-sale securities arising during the period

     86        (29     57     

Reclassify gain included in income

     (56     19        (37   (a, b)

Amortization of held-to-maturity discount resulting from transfer

     272        (92     180      (c)
  

 

 

   

 

 

   

 

 

   

Total other comprehensive income

     302        (102     200     
  

 

 

   

 

 

   

 

 

   

Balance as of September 30, 2015

   $ (125   $ 43      $ (82  
  

 

 

   

 

 

   

 

 

   

Three months ended September 30, 2014

        

Balance as of June 30, 2014

   $ (880   $ 300      $ (580  

Unrealized holding gain on available-for-sale securities arising during the period

     —          —          —       

Reclassify gain included in income

     —          —          —        (a, b)

Amortization of held-to-maturity discount resulting from transfer

     56        (19     37      (c)
  

 

 

   

 

 

   

 

 

   

Total other comprehensive income

     56        (19     37     
  

 

 

   

 

 

   

 

 

   

Balance as of September 30, 2014

   $ (824   $ 281      $ (543  
  

 

 

   

 

 

   

 

 

   

Nine months ended September 30, 2014

        

Balance as of December 31, 2013

   $ (2,207   $ 751      $ (1,456  

Unrealized holding gain on available-for-sale securities arising during the period

     1,356        (461     895     

Reclassify gain included in income

     (133     45        (88   (a, b)

Amortization of held-to-maturity discount resulting from transfer

     160        (54     106      (c)
  

 

 

   

 

 

   

 

 

   

Total other comprehensive income

     1,383        (470     913     
  

 

 

   

 

 

   

 

 

   

Balance as of September 30, 2014

   $ (824   $ 281      $ (543  
  

 

 

   

 

 

   

 

 

   

 

(a) Securities gains
(b) Federal Income Tax Provision
(c) There was no income statement effect from the transfer of securities to held-to-maturity.

 

26


Table of Contents

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

ITEM 2 —MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis focuses on the consolidated financial condition of the Company at September 30, 2015 as compared to December 31, 2014, and the consolidated results of operations for the three and nine month periods ended September 30, 2015 compared to the same periods in 2014. The purpose of this discussion is to provide the reader with a more thorough understanding of the Consolidated Financial Statements. This discussion should be read in conjunction with the interim Consolidated Financial Statements and related footnotes contained in Part I, Item 1 of this Quarterly Report.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report are not historical facts but rather are forward-looking statements that are subject to certain risks and uncertainties. When used herein, the terms “anticipates”, “plans”, “expects”, “believes”, and similar expressions as they relate to the Company or its management are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, and rapidly changing technology affecting financial services. Other factors not currently anticipated may also materially and adversely affect the Company’s results of operations, cash flows and financial position. There can be no assurance that future results will meet expectations. While the Company believes that the forward-looking statements in this report are reasonable, the reader should not place undue reliance on any forward-looking statement.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as may be required by applicable law.

FINANCIAL CONDITION

Total assets were $632 million at September 30, 2015, compared to $621 million at December 31, 2014, representing an increase of $11 million, or 2%. This growth was funded by a $5 million increase in deposits and a $4 million increase in short-term borrowings during the nine month period ended September 30, 2015. Loans and securities increased by $2 million and $13 million respectively, during the nine month period while cash and cash equivalents decreased $4 million, or 9%.

Net loans increased $2 million, or less than 1%, during the nine months ended September 30, 2015. Commercial loans including commercial real estate loans increased $2.5 million, or less than 1%, while construction and land development loans decreased $2.3 million, or 13%. Residential real estate loans increased $346 thousand, or less than 1%, and consumer loans increased 18% from December 31, 2014. Home purchase activity has increased and consumers continued to refinance their mortgage loans for lower long-term rates. Residential mortgage loan originations for the nine months ended September 30, 2015 and 2014 were $23 million. Originations sold into the secondary market were $10 million during the nine month period ended September 30, 2015 as compared to $5 million during the nine months ended September 30, 2014. The Bank originates and sells primarily fixed-rate thirty year mortgages into the secondary market.

The allowance for loan losses as a percentage of total loans was 1.12% at September 30, 2015 as compared to 1.07% at December 31, 2014. Outstanding loan balances increased less than 1% to $413 million at September 30, 2015. A provision of $389 thousand, offset by net charge-offs of $138 thousand, increased the allowance for loan losses for the nine months ended September 30, 2015.

 

27


Table of Contents

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

 

Nonaccrual loans decreased during third quarter 2015. For the nine months ending September 30, 2015 new loans totaling $217 thousand were placed on nonaccrual status, $167 thousand in charge-offs were recognized, $104 thousand was returned to accrual status and pay downs of $1.8 million were received during the nine month period on loans in nonaccrual status.

 

     September 30,     December 31,     September 30,  

(Dollars in thousands)

   2015     2014     2014  

Non-performing loans

   $ 2,018      $ 3,949      $ 4,682   

Other real estate

     —          —          —     

Allowance for loan losses

     4,632        4,381        5,188   

Total loans

     412,974        410,903        409,908   

Allowance: Loans

     1.12     1.07     1.27

Allowance: Non-performing loans

     2.3     1.1     1.1

The ratio of gross loans to deposits was 82% at September 30, 2015, compared to 82% at December 31, 2014.

The Company has no exposure to government-sponsored enterprise preferred stocks, collateralized debt obligations or trust preferred securities. Management has considered industry analyst reports, sector credit reports and the volatility within the bond market in concluding that the gross unrealized losses of $387 thousand within the available-for-sale and held-to-maturity portfolios as of September 30, 2015, were primarily the result of customary and expected fluctuations in the bond market and not necessarily the expected cash flows of the individual securities. As a result, all security impairments on September 30, 2015, are considered temporary and no impairment loss relating to these securities has been recognized.

Deposits increased $5 million, or 1%, from December 31, 2014 with noninterest bearing deposits increasing $7 million and interest-bearing deposit accounts decreasing $2 million. Total deposits as of September 30, 2015 are $19 million greater than September 30, 2014 deposit balances. On a year over year comparison, increases were recognized in every deposit category except for money market savings accounts and time deposits under $100 thousand.

Short-term borrowings consisting of overnight repurchase agreements with retail customers increased $4 million at September 30, 2015 from December 31, 2014 and other borrowings decreased $1 million as the Company repaid FHLB advances with required monthly amortization.

Total shareholders’ equity amounted to $60.5 million, or 9.6% of total assets, at September 30, 2015, compared to $57.5 million, or 9.3% of total assets, at December 31, 2014. The increase in shareholders’ equity during the nine months ending September 30, 2015 was due to net income of $4.4 million and other comprehensive gains of $200 thousand, partially offset by dividends declared of $1.6 million. The Company and the Bank met all regulatory capital requirements at September 30, 2015.

RESULTS OF OPERATIONS

Three months ended September 30, 2015 and 2014

For the quarters ended September 30, 2015 and 2014, the Company recorded net income of $1.6 and $1.5 million and $.57 and $0.55 per share, respectively. The $49 thousand increase in net income for the quarter was primarily the result of a $123 thousand decrease in the provision for loan losses and a $113 thousand increase in revenues. These increases were partially offset by an increase in noninterest expense of $174 thousand. Return on average assets and return on average equity were 0.98% and 10.27%, respectively, for the three month period of 2015, compared to 0.98% and 10.64%, respectively for the same quarter in 2014.

 

28


Table of Contents

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

 

Average Balance Sheets and Net Interest Margin Analysis

 

     For the three months ended September 30,  
     2015     2014  

(Dollars in thousands)

   Average
balance
     Average
rate
    Average
balance
     Average
rate
 

ASSETS

          

Interest-earning deposits in other banks

   $ 38,994         0.25   $ 24,552         0.23

Federal funds sold

     1,041         0.23        322         0.21   

Taxable securities

     126,103         2.15        121,955         2.15   

Tax-exempt securities

     21,599         3.93        15,919         4.37   

Loans

     408,069         4.49        407,571         4.53   
  

 

 

      

 

 

    

Total earning assets

     595,806         3.69     570,319         3.83

Other assets

     36,733           37,126      
  

 

 

      

 

 

    

TOTAL ASSETS

   $ 632,539         $ 607,445      
  

 

 

      

 

 

    

LIABILITIES AND SHAREHOLDERS’ EQUITY

          

Interest-bearing demand deposits

   $ 76,679         0.03   $ 73,076         0.05

Savings deposits

     156,698         0.07        151,507         0.08   

Time deposits

     125,061         0.75        129,882         0.76   

Other borrowed funds

     67,892         0.72        68,160         0.86   
  

 

 

      

 

 

    

Total interest bearing liabilities

     426,330         0.37     422,625         0.41

Non-interest bearing demand deposits

     144,076           126,552      

Other liabilities

     2,021           2,065      

Shareholders’ Equity

     60,112           56,203      
  

 

 

      

 

 

    

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   $ 632,539         $ 607,445      
  

 

 

      

 

 

    

Taxable equivalent net interest spread

        3.33        3.42

Taxable equivalent net interest margin

        3.43        3.53

Interest income for the quarter ended September 30, 2015, was $5.5 million representing a $27 thousand increase, or less than a 1% improvement, compared to the same period in 2014. This increase was primarily due to average investment volume increasing $10 million for the quarter ended September 30, 2015 as compared to the third quarter 2014. Interest expense for the quarter ended September 30, 2015 was $394 thousand, a decrease of $44 thousand, or 10%, from the same period in 2014. The decrease in interest expense occurred primarily due to a rate decrease of 0.14% on all other borrowings which declined from 0.86% in 2014 to 0.72% for the quarter ended September 30, 2015.

The provision for loan losses for the quarter ended September 30, 2015 was $0, compared to a $123 thousand provision for the same quarter in 2014. The provision for loan losses is determined based on management’s calculation of the adequacy of the allowance for loan losses, which includes provisions for classified loans as well as for the remainder of the portfolio based on historical data, including past charge-offs and current economic trends.

Noninterest income for the quarter ended September 30, 2015, was $1.1 million, an increase of $42 thousand, or 4%, compared to the same quarter in 2014. The gain on the sale of mortgage loans to the secondary market increased to $114 thousand for the quarter ending September 30, 2015, from $77 thousand in the same quarter in 2014. The gain in 2015 was greater due to an additional volume of loans sold during the third quarter 2015. Service charges on deposit accounts decreased $9 thousand, or 3%, compared to the same quarter in 2014 primarily from decreases in overdraft fees. Debit card interchange income increased $14 thousand, or 6%, with greater fee income. Fees from trust and brokerage services declined $1 thousand to $198 thousand for the third quarter 2015 as compared to the same quarter in 2014.

 

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Table of Contents

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

 

Noninterest expenses for the quarter ended September 30, 2015 increased $174 thousand, or 5%, compared to the third quarter of 2014. Salaries and employee benefits increased $99 thousand, or 5%, a result of increases in salary and medical benefits. Professional and director fees increased $41 thousand for the quarter ended September 30, 2015 as compared to third quarter 2014. The majority of this increase relates to legal and collection fees pertaining to one commercial loan customer. Occupancy and equipment expenses decreased $17 thousand in 2015 over the third quarter of 2014. Software expenses increased $21 thousand, or 12%, compared to the third quarter 2014 as a result of discounts received in 2014 on the core system software that have ended in 2015.

Federal income tax expense increased $13 thousand, or 2%, for the quarter ended September 30, 2015 as compared to the second quarter of 2014. The provision for income taxes was $687 thousand (effective rate of 31%) for the quarter ended September 30, 2015, compared to $674 thousand (effective rate of 31%) for the same quarter ended 2014.

RESULTS OF OPERATIONS

Nine months ended September 30, 2015 and 2014

Net income for the nine months ended September 30, 2015, was $4.42 million or $1.61 per share, as compared to $4.45 million or $1.62 per share during the same period in 2014. Return on average assets and return on average equity were 0.94% and 9.95%, respectively, for the nine month period of 2015, compared to 0.99% and 10.81%, respectively for 2014.

Comparative net income decreased as noninterest expenses increased $571 thousand or 5% for the nine month period in 2015 as compared to 2014. The provision for loan losses decreased $69 thousand or 15% during the same comparative period. Net interest income increased to $15.3 million for the nine months ended September 30, 2015, an increase of $317 thousand or 2% from the same period last year. Noninterest income improved $169 thousand to $3.4 million or 5% for the nine month period ending in 2015 as compared to 2014.

Interest income on loans increased $225 thousand, or 2%, for the nine months ended September 30, 2015, as compared to the same period in 2014. This increase was primarily due to an average volume increase of $8 million for the comparable nine month periods. Interest income on securities decreased $78 thousand, or 3%, as the average yield on securities dropped 0.08% to 2.41% on a fully taxable equivalent basis while the volume of securities increased $2 million for the comparable nine month periods. Interest income on fed funds sold and interest bearing deposits increased $35 thousand for the nine months ended September 30, 2015 as the average fed funds sold and due from banks interest bearing balances increased $18 million, compared to the same period in 2014.

 

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Table of Contents

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

 

Average Balance Sheet and Net Interest Margin Analysis

 

     For the nine months ended September 30,  
     2015     2014  
(Dollars in thousands)    Average
balance
     Average
rate
    Average
balance
     Average
rate
 

ASSETS

          

Due from banks-interest bearing

   $ 28,589         0.26   $ 11,942         0.25

Federal funds sold

     1,036         0.23        168         0.22   

Taxable securities

     126,956         2.15        129,640         2.25   

Tax-exempt securities

     20,330         4.06        15,682         4.46   

Loans

     413,368         4.51        404,914         4.54   
  

 

 

      

 

 

    

Total earning assets

     590,279         3.78     562,346         3.92

Other assets

     36,466           36,553      
  

 

 

      

 

 

    

TOTAL ASSETS

   $ 626,745         $ 598,899      
  

 

 

      

 

 

    

LIABILITIES AND SHAREHOLDERS’ EQUITY

          

Interest bearing demand deposits

   $ 76,532         0.03   $ 72,847         0.05

Savings deposits

     157,426         0.07        151,160         0.09   

Time deposits

     126,304         0.75        130,133         0.77   

Other borrowed funds

     65,676         0.74        68,435         0.84   
  

 

 

      

 

 

    

Total interest bearing liabilities

     425,938         0.37     422,575         0.42

Non-interest bearing demand deposits

     139,530           119,346      

Other liabilities

     1,961           1,990      

Shareholders’ Equity

     59,316           54,988      
  

 

 

      

 

 

    

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

   $ 626,745         $ 598,899      
  

 

 

      

 

 

    

Taxable equivalent net interest spread

        3.41        3.50

Taxable equivalent net interest margin

        3.51        3.60

Interest expense decreased $135 thousand to $1.2 million for the nine months ended September 30, 2015, compared to the same period in 2014. Interest expense on deposits decreased $69 thousand, or 8%, from the same period as last year, while interest expense on short-term and other borrowings decreased $66 thousand or 15%. The decrease in interest expense has been caused by lower interest rates being paid across the board on interest-bearing deposit accounts and borrowings. Additionally, during the comparable nine month periods, the Company grew non-interest bearing deposits by $20 million in 2015. Time deposits continue to renew at lower interest rates, and some depositors have moved monies to savings instruments anticipating higher rates than time deposits. Competition for deposits appears to be increasing from a year ago with larger money center banks and community banks increasing rates offered for money market savings accounts. The net interest margin decreased by 9 basis points for the nine month period ended September 30, 2015, to 3.51%, from 3.60% for the same period in 2014. This margin decrease is primarily the result of decreased interest yields and the change in the asset mix to a greater percentage of overnight funds.

The provision for loan losses was $389 thousand during the nine months of 2015, compared to $458 thousand in the same nine month period of 2014. The decrease in the provision for loan losses from a year ago reflected a 59% decrease in nonaccrual loans, a 53% decrease in early stage and greater than ninety day delinquency and a decrease in net loan charge offs of 61%. The provision for loan losses is determined based on management’s calculation of the adequacy of the allowance for loan losses, which includes provisions for classified loans as well as for the remainder of the portfolio based on historical data including past charge-offs and current economic trends.

Non-interest income increased $164 thousand during the nine months ended September 30, 2015, as compared to the same period in 2014. Gain on the sale of investments decreased by $77 thousand for the nine months ended September 30, 2015 as compared to the same period in 2014. Debit card interchange income increased $56 thousand or 8% as a result of increased servicer revenue during the nine months of 2015. Service charges on deposits decreased $21 thousand from the same period in 2014 reflecting a decrease in overdraft fees based on volume.

 

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Table of Contents

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

 

Increases were recognized in gains on mortgage loans sold in the secondary market on a year over year basis as home purchase activity increased in a low interest environment.

Non-interest expenses increased $571 thousand, or 5%, for the nine months ended September 30, 2015, compared to the same period in 2014. Salaries and employee benefits increased $343 thousand, or 5%, primarily the result of salary and medical benefit increases. Professional fees increased $137 thousand, or 26%, as a one-time expense of $110 thousand was incurred during first quarter 2015 to contract a professional firm to assist the company with assessment of market opportunities and long-term strategic goals. Loan legal and collection fees were $107 thousand for the nine month period ended September 30, 2015 as compared to a $74 thousand recognized for the nine months ended September 30, 2014 as expense recoveries were recognized in 2014. Software expense increased $90 thousand for the nine month period in 2015 as compared to the same period in 2014 reflecting the cost and amortization of the new core system that was installed in fourth quarter 2013. The Bank’s telephone expense increased $20 thousand to $216 thousand for the nine months ended 2015 reflecting an increase in assets for the nine months ended September 30, 2015 as compared to 2014. Occupancy and equipment expense decreased $36 thousand, or 3%, reflecting a decrease in small equipment purchases and equipment lease expense when compared to 2014.

The provision for income taxes was $1.9 million (effective rate of 31%) for the nine months ended September 30, 2015, compared to $1.9 million (effective rate of 30%) for the same period in 2014.

CAPITAL RESOURCES

CSB maintained a strong capital position with tangible common equity to tangible assets of 8.81% at September 30, 2015 compared with 8.40% at September 30, 2014.

The Board of Governors of the Federal Reserve System (the “Federal Reserve”) adopted risk-based capital guidelines on July 2, 2013 for bank holding companies and state member banks, designed to improve the level and quality of capital. CSB became subject to the new capital and risk weighting rules on January 1, 2015 with its first reporting period on March 31, 2015. The quality of capital will be provided by the new measurement of Tier 1 capital called common equity tier 1 or (“CET1”). Effective with the March 31, 2015 Call Report the Bank selected the opt-out election for accumulated other comprehensive income (“AOCI”). This election will neutralize the effects of unrealized gains and losses from available-for-sale securities and other elements of the AOCI account for regulatory capital purposes.

Consistent with the Board of Director’s commitment to public confidence and safe and sound banking operations, capital targets and minimum risk-based capital ratios for CSB were established to maintain excess capital to well-capitalized standards. To be considered well-capitalized, an institution must have a total risk-based capital ratio of at least 10%, a tier 1 capital ratio of at least 8%, a leverage capital ratio of at least 5%, a CET1 ratio of at least 6.5%, and must not be subject to any order or directive requiring the institution to improve its capital level. An adequately capitalized institution has a total risk-based capital ratio of at least 8%, a tier 1 capital ratio of at least 6%, a CET1 ratio of at least 4.5% and a leverage ratio of at least 4%.

Failure to meet specified minimum capital requirements could result in regulatory actions by the Federal Reserve or Ohio Division of Financial Institutions that could have a material effect on the Company’s financial condition or results of operations. Management believes there were no material changes to capital resources as presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. As of September 30, 2015 the Company and the Bank met all capital adequacy requirements to which they were subject.

 

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Table of Contents

CSB BANCORP, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

 

     Capital Ratios  
     September 30,
2015
    December 31,
2014
 

Common Equity Tier 1 Capital

    

Consolidated

     12.9     NA   

Bank

     12.7     NA   

Tier 1 Capital Ratio

    

Consolidated

     12.9     12.5

Bank

     12.7     12.3

Total Capital Ratio

    

Consolidated

     14.0     13.6

Bank

     13.7     13.4

Tier 1 Leverage Ratio

    

Consolidated

     8.9     8.5

Bank

     8.7     8.4

LIQUIDITY

 

(Dollars in millions)

   September 30,
2015
    December 31,
2014
    Change  

Cash and cash equivalents

   $ 40      $ 44      $ (4

Unused lines of credit

     52        46        6   

Unpledged AFS securities at fair market value

     58        48        10   
  

 

 

   

 

 

   

 

 

 
   $ 150      $ 138      $ 12   
  

 

 

   

 

 

   

 

 

 

Net deposits and short-term liabilities

   $ 500      $ 497      $ 3   
  

 

 

   

 

 

   

 

 

 

Liquidity ratio

     30.2      27.9      2.3   

Minimum board approved liquidity ratio

     20.0      20.0      —     

Liquidity refers to the Company’s ability to generate sufficient cash to fund current loan demand, meet deposit withdrawals, pay operating expenses and meet other obligations. Liquidity is monitored by the Company’s Asset Liability Committee. Other sources of liquidity include, but are not limited to, purchases of federal funds, advances from the FHLB, adjustments of interest rates to attract deposits, brokered deposits and borrowing at the Federal Reserve discount window. Management believes that its sources of liquidity are adequate to meet cash flow obligations for the foreseeable future.

The liquidity ratio was 30.2% and 27.9% at September 30, 2015 and December 31, 2014.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements (as such term is defined in applicable Securities and Exchange Commission (the “Commission”) rules) that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

 

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Table of Contents

CSB BANCORP, INC.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3 –QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the quantitative and qualitative disclosures about market risks as of September 30, 2015, from the disclosures presented in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

Management performs a quarterly analysis of the Company’s interest rate risk over a twenty-four month horizon. The analysis includes two balance sheet models, one based on a static balance sheet and one on a dynamic balance sheet with projected growth in assets and liabilities. All positions are currently within the Company’s board-approved policy.

The following table presents an analysis of the estimated sensitivity of the Company’s annual net interest income to sudden and sustained -100 through +400 basis point changes, in 100 basis point increments, in market interest rates at September 30, 2015 and December 31, 2014. The net interest income reflected is for the first twelve month period of the modeled twenty-four month horizon. The underlying balance sheet for illustrative purposes is dynamic with projected growth in assets and liabilities.

 

September 30, 2015  
(Dollars in thousands)                           

Change in

Interest Rates

(basis points)

   Net
Interest
Income
     Dollar
Change
     Percentage
Change
    Board
Policy
Limits
 
+400    $ 21,836       $ 1,506         7.4     +/-25
+300      21,439         1,109         5.5        +/-15   
+200      21,028         698         3.4        +/-10   
+100      20,650         320         1.6        +/-5   
0      20,330         —           —       
-100      20,024         (306      (1.5     +/-5   

December 31, 2014

 
+400    $ 21,408       $ 1,144         5.6     +/-25
+300      21,082         818         4.0        +/-15   
+200      20,766         502         2.5        +/-10   
+100      20,454         190         0.9        +/-5   
0      20,264         —           —       
-100      20,022         (242      (1.1     +/-5   

 

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Table of Contents

CSB BANCORP, INC.

CONTROLS AND PROCEDURES

ITEM 4 — CONTROLS AND PROCEDURES

With the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that:

 

  (a) information required to be disclosed by the Company in this Quarterly Report on Form 10-Q would be accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure;

 

  (b) information required to be disclosed by the Company in this Quarterly Report on Form 10-Q would be recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms; and

 

  (c) the Company’s disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to the Company and its consolidated subsidiary is made known to them, particularly during the period for which the Company’s periodic reports, including this Quarterly Report on Form 10-Q, are being prepared.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes during the period covered by this Quarterly Report on Form 10-Q in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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Table of Contents

CSB BANCORP, INC.

FORM 10-Q

Quarter ended September 30, 2015

PART II – OTHER INFORMATION

 

ITEM 1- LEGAL PROCEEDINGS.

In the opinion of management there are no outstanding legal proceedings that are reasonably likely to have a material adverse effect on the company’s financial condition or results of operations.

 

ITEM 1A- RISK FACTORS.

There have been no material changes to the Company’s risk factors from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

 

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

On July 7, 2005 CSB Bancorp, Inc. filed Form 8-K with the Commission announcing that its Board of Directors approved a Stock Repurchase Program authorizing the repurchase of up to 10% of the Company’s common shares then outstanding. Repurchases may be made from time to time as market and business conditions warrant, in the open market, through block purchases and in negotiated private transactions. No repurchases were made during the quarterly period ended September 30, 2015.

 

ITEM 3- DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

 

ITEM 4- MINE SAFETY DISCLOSURES.

Not applicable.

 

ITEM 5- OTHER INFORMATION.

Not applicable.

 

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Table of Contents

CSB BANCORP, INC.

FORM 10-Q

Quarter ended September 30, 2015

PART II – OTHER INFORMATION

 

ITEM 6- Exhibits.

 

Exhibit

Number

  

Description of Document

3.1    Amended Articles of Incorporation of CSB Bancorp, Inc. (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed August 6, 2004, Exhibit 3.1, film number 04958544).
3.2    Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to the Registrant’s Form 10-SB).
3.2.1    Amended Article VIII of the Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form DEF 14a filed on March 25, 2009, Appendix A, film number 09703970).
4.0    Specimen stock certificate (incorporated by reference to Registrant’s Form 10-SB).
11    Statement Regarding Computation of Per Share Earnings.
31.1    Rule 13a-14(a)/15d-14(a) Chief Executive Officer’s Certification.
31.2    Rule 13a-14(a)/15d-14(a) Chief Financial Officer’s Certification.
32.1    Section 1350 Chief Executive Officer’s Certification.
32.2    Section 1350 Chief Financial Officer’s Certification.
101    The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in XBRL (extensible Business Reporting Language): (i) Consolidated Balance Sheets: (ii) Consolidated Statements of Income: (iii) Consolidated Statements of Comprehensive Income: (iv) Condensed Consolidated Statements of Changes in Shareholders’ Equity: (v) Condensed Consolidated Statements of Cash Flows: and (vi) Notes to Consolidated Financial Statements.

 

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Table of Contents

CSB BANCORP, INC.

SIGNATURES

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

 

      CSB BANCORP, INC.
      (Registrant)
Date: November 13, 2015      

/s/ Eddie L. Steiner

      Eddie L. Steiner
      President
      Chief Executive Officer
Date: November 13, 2015      

/s/ Paula J. Meiler

      Paula J. Meiler
      Senior Vice President
      Chief Financial Officer

 

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Table of Contents

CSB BANCORP, INC.

INDEX TO EXHIBITS

 

Exhibit
Number

  

Description of Document

3.1    Amended Articles of Incorporation of CSB Bancorp, Inc. (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q filed August 6, 2004, Exhibit 3.1, film number 04958544).
3.2    Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to the Registrant’s Form 10-SB).
3.2.1    Amended Article VIII of the Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to Registrant’s Form DEF 14a filed on March 25, 2009, Appendix A, film number 09703970).
4.0    Specimen stock certificate (incorporated by reference to Registrant’s Form 10-SB).
11    Statement Regarding Computation of Per Share Earnings.
31.1    Rule 13a-14(a)/15d-14(a) Chief Executive Officer’s Certification.
31.2    Rule 13a-14(a)/15d-14(a) Chief Financial Officer’s Certification.
32.1    Section 1350 Chief Executive Officer’s Certification.
32.2    Section 1350 Chief Financial Officer’s Certification.
101    The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in XBRL (extensible Business Reporting Language): (i) Consolidated Balance Sheets: (ii) Consolidated Statements of Income: (iii) Consolidated Statements of Comprehensive Income: (iv) Condensed Consolidated Statements of Changes in Shareholders’ Equity: (v) Condensed Consolidated Statements of Cash Flows: and (vi) Notes to Consolidated Financial Statements.

 

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