CSB BANCORP, INC.

FORM10-Q

QUARTER ENDED ~~June 30, 2019~~MARCH 31, 2020

Table of Contents


				~~Page~~
		Page
ITEM 1 –	FINANCIAL STATEMENTS (Unaudited)			3
Consolidated Balance Sheets			3
Consolidated Statements of Income			4
Consolidated Statements of Comprehensive Income			5
Consolidated Statements of Changes in ~~Shareholders’~~Shareholders' Equity			6
Condensed Consolidated Statements of Cash Flows			7
Notes to Consolidated Financial Statements			8

ITEM 2 –	~~MANAGEMENT’S~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		27	24
ITEM 3 –	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		34	29
ITEM 4 –	CONTROLS AND PROCEDURES		35	30

Part II –- Other Information

~~ITEM 1~~ ITEM1 –	Legal Proceedings		36	31
~~ITEM 1A~~ ITEM1A –	Risk Factors		36	31
ITEM2 –	Unregistered Sales of Equity Securities and Use of Proceeds		36	31
~~ITEM 3~~ ITEM3 –	Defaults upon Senior Securities		36	31
~~ITEM 4~~ ITEM4 –	Mine Safety Disclosures		36	31
ITEM5 –	Other Information		36	31
~~ITEM 6~~ ITEM6 –	Exhibits		37	32
Signatures			38	33

CSB BANCORP, INC.

PART I – FINANCIAL INFORMATION

ITEM 1. – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30,			December 31,			March 31,			December 31,
(Dollars in thousands)	2019			2018			2020			2019
ASSETS
Cash and cash equivalents
Cash and due from banks	$	15,214		$	23,214		$	18,277		$	17,648
Interest-earning deposits in other banks		42,063			22,350			77,995			84,369

Total cash and cash equivalents		57,277			45,564			96,272			102,017

Securities
Available-for-sale, at fair value		86,297			85,528			108,263			112,146
Held-to-maturity (fair value 2019-$19,696; 2018-$20,118)		19,657			20,688
Equity Securities		87			83
Held-to-maturity (fair value 2020-$11,542; 2019-13,950)								11,242			13,869
Equity securities								79			92
Restricted stock, at cost		4,614			4,614			4,614			4,614

Total securities		110,655			110,913			124,198			130,721

Loans held for sale		409			108			256			622
Loans		550,612			548,974			555,320			551,633
Less allowance for loan losses		6,537			5,907			7,120			7,017

Net loans		544,075			543,067			548,200			544,616

Premises and equipment, net		11,638			9,961			12,387			12,040
Core deposit intangible		135			167			89			104
Goodwill		4,728			4,728			4,728			4,728
Bank-owned life insurance		16,760			13,554			19,023			18,894
Accrued interest receivable and other assets		4,575			3,660			4,888			4,941

TOTAL ASSETS	$	750,252		$	731,722		$	810,041		$	818,683

LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest-bearing	$	180,766		$	185,871		$	188,137		$	197,780
Interest-bearing		442,562			420,627			483,025			485,766

Total deposits		623,328			606,498			671,162			683,546

Short-term borrowings		35,474			37,415			40,605			38,889
Other borrowings		6,576			8,525			6,206			6,330
Accrued interest payable and other liabilities		3,416			2,748			4,439			4,442

Total liabilities		668,794			655,186			722,412			733,207

SHAREHOLDERS’ EQUITY
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares; outstanding 2,742,350 shares 2019 and 2,742,242 shares 2018		18,629			18,629
SHAREHOLDERS' EQUITY
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued 2,980,602 shares; outstanding 2,742,350 shares 2020 and 2019								18,629			18,629
Additionalpaid-in capital		9,815			9,815			9,815			9,815
Retained earnings		57,988			54,288			63,455			61,740
Treasury stock at cost: 238,252 shares 2019, 238,360 shares 2018		(4,780	)		(4,784	)
Accumulated other comprehensive loss		(194	)		(1,412	)

Total shareholders’ equity		81,458			76,536

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	750,252		$	731,722

Treasury stock at cost: 238,252 shares 2020 and 2019								(4,780	)		(4,780	)
Accumulated other comprehensive income								510			72
Total shareholders' equity								87,629			85,476
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY							$	810,041		$	818,683

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended					Six Months Ended
	June 30,					June 30,				Three Months Ended March 31,
(Dollars in thousands, except per share data)	2019			2018		2019		2018		2020			2019
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	7,185		$	6,515	$	14,257	$	12,654	$	6,850		$	7,072
Taxable securities		584			594		1,171		1,197		609			587
Nontaxable securities		134			152		268		313		119			134
Other		218			83		393		129		239			175

Total interest and dividend income		8,121			7,344		16,089		14,293		7,817			7,968

INTEREST EXPENSE
Deposits		921			560		1,746		1,014		831			825
Short-term borrowings		93			84		186		138		41			93
Other borrowings		36			48		75		100		29			39

Total interest expense		1,050			692		2,007		1,252		901			957

NET INTEREST INCOME		7,071			6,652		14,082		13,041		6,916			7,011
PROVISION FOR LOAN LOSSES		285			324		570		648		178			285

Net interest income, after provision for loan losses		6,786			6,328		13,512		12,393		6,738			6,726

NONINTEREST INCOME
NON INTEREST INCOME
Service charges on deposit accounts		313			300		605		584		291			292
Trust services		212			217		436		436		230			224
Debit card interchange fees		369			323		716		636		375			347
Gain on sale of loans, net		76			60		155		137		114			79
Earnings on bank owned life insurance		122			85		205		166		129			83
Unrealized gain (loss) on equity securities		(2	)		—		4		4
Unrealized gain or (loss) on equity securities, net											(13	)		6
Other income		223			183		416		350		217			193

Total noninterest income		1,313			1,168		2,537		2,313		1,343			1,224

NONINTEREST EXPENSES
NON INTEREST EXPENSES
Salaries and employee benefits		2,915			2,718		5,757		5,355		2,968			2,842
Occupancy expense		205			214		409		434		220			204
Equipment expense		143			160		280		316		135			137
Professional and director fees		308			239		647		551		330			339
Financial institutions and franchise tax expense		153			142		306		284		171			153
Marketing and public relations		139			119		256		239		127			117
Software expense		232			221		450		434		227			218
Debit card expense		132			126		259		242		140			127
Amortization of intangible assets		16			25		32		50		15			16
FDIC insurance expense		48			72		98		147
Other expenses		609			583		1,197		1,104		674			638

Total noninterest expenses		4,900			4,619		9,691		9,156		5,007			4,791

Income before income taxes		3,199			2,877		6,358		5,550		3,074			3,159
FEDERAL INCOME TAX PROVISION		613			553		1,232		1,062		591			619

NET INCOME	$	2,586		$	2,324	$	5,126	$	4,488	$	2,483		$	2,540

Basic and diluted net earnings per share	$	0.94		$	0.85	$	1.87	$	1.64	$	0.91		$	0.93

See notes to unaudited consolidated financial statements

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,						Three Months Ended March 31,
(Dollars in thousands)	2019			2018			2019			2018			2020			2019
Net income	$	2,586		$	2,324		$	5,126		$	4,488		$	2,483		$	2,540

Other comprehensive income (loss)
Unrealized gains (losses) arising during the period		762			(156	)		1,511			(1,467	)
Amounts reclassified from accumulated other comprehensive income,held-to-maturity		15			20			30			41
Other comprehensive income
Unrealized gains arising during the period														540			749
Amortization of discount on securities transferred to held-to-maturity														14			15
Income tax effect		(163	)		29			(323	)		300			(116	)		(160	)

Other comprehensive income (loss)		614			(107	)		1,218			(1,126	)

Other comprehensive income														438			604
Total comprehensive income	$	3,200		$	2,217		$	6,344		$	3,362		$	2,921		$	3,144

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)


(Dollars in thousands)	Common stock		Additional paid-in capital		Retained earnings			Treasury stock			Accumulated other comprehensive loss			Total			Common stock		Additional paid-in capital		Retained earnings			Treasury stock			Accumulated other comprehensive income (loss)			Total
Three Months Ended June 30, 2019
Three Months Ended March 31, 2019
Balance, beginning of period	$	18,629	$	9,815	$	56,115		$	(4,784	)	$	(808	)	$	78,967		$	18,629	$	9,815	$	54,288		$	(4,784	)	$	(1,412	)	$	76,536
Net income		—		—		2,586			—			—			2,586			—		—		2,540			—			—			2,540
Other comprehensive income		—		—		—			—			614			614			—		—		—			—			604			604
Issuance of 108 treasury shares		—		—		—			4			—			4
Cash dividends declared, $0.26 per share		—		—		(713	)		—			—			(713	)		—		—		(713	)		—			—			(713	)

Balance, end of period	$	18,629	$	9,815	$	57,988		$	(4,780	)	$	(194	)	$	81,458		$	18,629	$	9,815	$	56,115		$	(4,784	)	$	(808	)	$	78,967

Six Months Ended June 30, 2019
Three Months Ended March 31, 2020
Balance, beginning of period	$	18,629	$	9,815	$	54,288		$	(4,784	)	$	(1,412	)	$	76,536		$	18,629	$	9,815	$	61,740		$	(4,780	)	$	72		$	85,476
Net income		—		—		5,126			—			—			5,126			—		—		2,483			—			—			2,483
Other comprehensive income		—		—		—			—			1,218			1,218			—		—		—			—			438			438
Issuance of 108 treasury shares		—		—		—			4			—			4
Cash dividends declared, $0.52 per share		—		—		(1,426	)		—			—			(1,426	)

Cash dividends declared, $0.28 per share																		—		—		(768	)		—			—			(768	)
Balance, end of period	$	18,629	$	9,815	$	57,988		$	(4,780	)	$	(194	)	$	81,458		$	18,629	$	9,815	$	63,455		$	(4,780	)	$	510		$	87,629

Three Months Ended June 30, 2018
Balance, beginning of period	$	18,629	$	9,815	$	49,070		$	(4,784	)	$	(1,711	)	$	71,019
Net income		—		—		2,324			—			—			2,324
Other comprehensive loss		—		—		—			—			(107	)		(107	)
Cash dividends declared, $0.24 per share		—		—		(658	)		—			—			(658	)

Balance, end of period	$	18,629	$	9,815	$	50,736		$	(4,784	)	$	(1,818	)	$	72,578

Six Months Ended June 30, 2018
Balance, beginning of period	$	18,629	$	9,815	$	47,535		$	(4,784	)	$	(663	)	$	70,532
Net income		—		—		4,488			—			—			4,488
Other comprehensive loss		—		—		—			—			(1,126	)		(1,126	)
Cumulative effect adjustment equity securities, related to ASU2016-01		—		—		29			—			(29	)		—
Cash dividends declared, $0.48 per share		—		—		(1,316	)		—			—			(1,316	)

Balance, end of period	$	18,629	$	9,815	$	50,736		$	(4,784	)	$	(1,818	)	$	72,578

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended
	June 30,						Three Months Ended March 31,
(Dollars in thousands)	2019			2018			2020			2019
NET CASH FROM OPERATING ACTIVITIES	$	4,500		$	4,023		$	2,488		$	1,894
CASH FLOWS FROM INVESTING ACTIVITIES
Securities:
Proceeds from repayments,available-for-sale		6,268			6,151			10,338			1,836
Proceeds from repayments,held-to-maturity		1,045			5,956			2,635			477
Purchases,available-for-sale		(5,705	)		(992	)		(6,055	)		(2,023	)
Purchases,held-to-maturity		—			(2,029	)
Loan originations, net of repayments		(1,587	)		(18,938	)		(3,808	)		870
Property, equipment, and software acquisitions		(2,039	)		(639	)		(551	)		(976	)
Purchase of bank-owned life insurance		(3,000	)		—			—			(3,000	)
Proceeds from sale of other real estate		—			30

Net cash used in investing activities		(5,018	)		(10,461	)

Net cash provided by (used in) investing activities								2,559			(2,816	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits		16,830			11,814			(12,384	)		844
Net change in short-term borrowings		(1,941	)		4,675			1,716			(1,091	)
Repayment of other borrowings		(1,949	)		(2,582	)		(124	)		(152	)
Cash dividends paid		(713	)		(658	)
Issuance of treasury stock		4			—

Net cash provided by financing activities		12,231			13,249

NET INCREASE IN CASH AND CASH EQUIVALENTS		11,713			6,811
Net cash used in financing activities								(10,792	)		(399	)
NET DECREASE IN CASH AND CASH EQUIVALENTS								(5,745	)		(1,321	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		45,564			36,420			102,017			45,564

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	57,277		$	43,231		$	96,272		$	44,243

SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest	$	1,969		$	1,276		$	909		$	921
Income taxes		1,475			1,110			—			—
Noncash financing activities:
Dividends declared		713			658			768			713
Lease adoption:
Right of use lease asset		477			—			—			477
Lease liability		469			—			—			469

See notes to unaudited consolidated financial statements.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—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 ~~June 30, 2019,~~March 31, 2020, 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, ~~2018,~~2019, 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 ~~June 30, 2019~~March 31, 2020 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.

~~ADOPTION~~REVENUE RECOGNITION

Management has determined the primary sources of revenue emanating from interest and dividend income on loans and securities along with noninterest revenue resulting from investment security gains, loan servicing, gains on the sale of loans, commitment fees, fees from financial guarantees, certain credit cards fees, and income on bank-owned life insurance are not within the scope of ASC 606. These sources of revenue comprise 88% of the total revenue of the Company. Services within the scope of ASC 606 include income from fiduciary activities, brokerage fees, service charges on deposit accounts, other fee income, ATM fees, interchange fees, and gain on sale of OREO, net. For these accounts, fees are related to specific customer transactions, or attributable to specific performance obligations of the Bank where revenue is recognized at a defined point in time upon completion of the requested service/transaction.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF ~~NEW~~SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

ASU 2016-13 - Financial Instruments - Credit Losses~~2016-02~~ ~~– Leases.~~~~This~~. The Update and all subsequent ASU’s that modified Topic ~~842 set forth a new lease accounting model for lessors and lessees. For lessees, virtually all leases will be required to be recognized on the balance sheet by recording aright-of-use~~ asset and lease liability. Subsequent accounting for leases varies depending on whether the lease is an operating lease or a finance lease. The accounting provided by a lessor is largely unchanged from326, requires that applied under the existing guidance. The ASU requires additional qualitative and quantitative disclosures with the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

~~The Update and its related amendments were adopted as of January 1, 2019, which resulted in the recognition of operatingright-of-use~~ ~~assets totaling $477 thousand and operating lease liabilities totaling $469 thousand. The Company elected to adopt the transition relief provisions from ASU2018-11~~ ~~and recorded the impact of adoption as of January 1, 2019, without restating any prior-year amounts or disclosures. The Company has presented the necessary disclosures in Note 8.~~

~~RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS~~

~~ASU2016-13—Financial~~ ~~Instruments—Credit Losses.~~~~This Update and all subsequent ASU’s that modify Topic 326, require~~ financial assets be presented at the net amount expected to be collected (i.e. net of expected credit losses), eliminating the probable recognition threshold for credit losses on financial assets measured at amortized cost. The measurement of expected credit losses should be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ~~The Update is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for annual and interim periods beginning after December 15, 2018.~~ We expect the Update will result in an increase in the allowance for credit losses for the estimated life of the financial asset, including an estimate for debt securities. The amount of any increase will be impacted by the portfolio composition and quality at the adoption date, as well as economic conditions and forecasts at that time. A cumulative-effect adjustment to retained earnings is required as of the beginning of the year of adoption. The Company expects to recognize aone-time cumulative effect adjustment to the allowance for loan losses, but cannot yet determine the magnitude of any suchone-time adjustment or the overall impact of the new guidance on the consolidated financial statements. ~~During July~~In November 2019, the FASB deferred the effective date for ASC 326, Financial ~~Accounting Standards Board (FASB)~~

~~CSB BANCORP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~

~~unanimously voted for a proposal to delay this Update to January, 2023~~Instruments – Credit Losses, for smaller reporting ~~companies. While there is~~companies to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company qualifies as a ~~thirty day comment period starting in August, the proposed delay is widely expected~~smaller reporting company and does not expect to ~~be adopted.~~early adopt these ASU’s.

ASU~~2017-04—~~ 2017-04 - Simplifying the Test for Goodwill Impairment.The Update, and all subsequent ASU’s, simplifies the goodwill impairment test. Under the new guidance, Step 2 of the goodwill impairment process that requires an entity to determine the implied fair value of its goodwill by assigning fair value to all its assets and liabilities is eliminated. Instead, the entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting ~~unit’s~~unit's fair value. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new guidance is effective for annual and interim goodwill tests performed in fiscal years beginning after December 15, 2019. Early adoption is permitted. In November 2019, the FASB deferred the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. This Update is not expected to have a material impact on the Company’s financial statements.

CSB BANCORP, INC.

~~ASU2018-13—Fair~~ ~~Value Measurement—Changes the Disclosure Requirements for Fair Value Measurements.~~The Update removes the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level III fair value measurements. The Update requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level III fair value measurements. This Update is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. This Update is not expected to have a significant impact on the Company’s financial statements.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~ASU~~(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~2018-15—~~ (CONTINUED)

ASU 2018-15 - Intangibles – Goodwill and Other –Internal-Use Software. ~~Software.~~This Update addresses customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred forinternal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtaininternal-use software (and hosting arrangements that include aninternal-use software license). This Update is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The amendments in this Update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. ~~This Update is not expected~~In November 2019, the FASB deferred the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies to ~~have a significant impact on the Company’s financial statements.~~

~~ASU2019-01—Leases~~ ~~(Topic 842): Codification Improvements~~. This Update addresses issues lessors sometimes encounter. Specifically addressed in this Update were issues related to 1) determining the fair value of the underlying asset by the lessor that are not manufacturers or dealers (generally financial institutions and captive finance companies, and 2) lessors that are depository and lending institutions should classify principal and payments received under sales-type and direct financing leases within investing activities in the cash flow statement. The ASU also exempts both lessees and lessors from having to provide the interim disclosures required by ASC~~250-10-50-3~~ ~~in the fiscal year in which a company adopts the new leases standard. The amendments addressing the two lessor accounting issues are effective for public business entities for~~ fiscal years beginning after December 15, ~~2019,~~2022, and interim periods within those fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

ASU 2019-12 - Income Taxes. This update simplifies the accounting for income taxes, changes the accounting for certain tax transactions, and makes minor improvements to the codification. This Update provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and provides guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized as a separate transaction. The Update also changes current guidance for making an intra-period allocation, if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a foreign entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and determining how to apply the income tax guidance to franchise taxes that are partially based on income. For public business entities, the amendments in this Update are effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2020. This update is not expected to have a significant impact on the Company’s financial statements.

ASU 2020-4 – Reference Rate Reform (Topic 848). This update provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as Secured Overnight Financing Rate. Entities can elect not to apply certain modification accounting requirements to contracts affected by what the guidance calls reference rate reform, if certain criteria are met. An entity that makes this election would not have to remeasure the contracts at the modification date or reassess a previous accounting determination. Also, entities can elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met, and can make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform. The amendments in this ASU are effective for all entities upon issuance through December 31, 2022. This Update is not expected to have a significant impact on the Company’s financial statements.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~NOTE~~Note 2 – SECURITIES

Securities consist of the following at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:


(Dollars in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value		Amortized cost		Gross unrealized gains		Gross unrealized (losses)			Fair value
June 30, 2019
March 31, 2020
Available-for-sale
U.S. Treasury security	$	990	$	—	$	2	$	988	$	999	$	21	$	—		$	1,020
U.S. Government agencies		7,350		—		32		7,318		2,000		3		—			2,003
Mortgage-backed securities of government agencies		46,233		181		191		46,223		74,328		1,104		(225	)		75,207
Asset-backed securities of government agencies		987		—		12		975		910		—		(105	)		805
State and political subdivisions		23,131		303		5		23,429		20,648		309		—			20,957
Corporate bonds		7,626		19		281		7,364		8,566		2		(297	)		8,271

Totalavailable-for-sale		86,317		503		523		86,297		107,451		1,439		(627	)		108,263

Held-to-maturity
U.S. Government agencies		9,484		14		41		9,457		3,000		8		—			3,008
Mortgage-backed securities of government agencies		10,173		142		76		10,239		8,242		292		—			8,534

Totalheld-to-maturity		19,657		156		117		19,696		11,242		300		—			11,542
Equity securities		53		34		—		87		53		26		—			79
Restricted stock		4,614		—		—		4,614		4,614		—		—			4,614

Total securities	$	110,641	$	693	$	640	$	110,694	$	123,360	$	1,765	$	(627	)		124,498

December 31, 2018
December 31, 2019
Available-for-sale
U.S. Treasury security	$	997	$	—	$	1	$	996	$	998	$	1	$	—		$	999
U.S. Government agencies		7,350		—		180		7,170		5,500		—		(4	)		5,496
Mortgage-backed securities of government agencies		45,744		41		884		44,901		75,676		326		(145	)		75,857
Asset-backed securities of government agencies		1,040		—		16		1,024		934		—		(17	)		917
State and political subdivisions		23,282		49		206		23,125		21,161		351		(1	)		21,511
Corporate bonds		8,646		—		334		8,312		7,605		23		(262	)		7,366

Totalavailable-for-sale		87,059		90		1,621		85,528		111,874		701		(429	)		112,146
Held-to-maturity
U.S. Government agencies		9,482		6		390		9,098		4,999		—		(6	)		4,993
Mortgage-backed securities of government agencies		11,206		28		214		11,020		8,870		143		(56	)		8,957

Totalheld-to-maturity		20,688		34		604		20,118		13,869		143		(62	)		13,950
Equity securities		53		30		—		83		53		39		—			92
Restricted stock		4,614		—		—		4,614		4,614		—		—			4,614

Total securities	$	112,414	$	154	$	2,225	$	110,343	$	130,410	$	883	$	(491	)	$	130,802

~~CSB BANCORP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 2 – SECURITIES~~~~(CONTINUED)~~

The amortized cost and fair value of debt securities at ~~June 30, 2019,~~March 31, 2020, 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
   $ 2,994    $ 2,995
Due after one through five years
   17,214    17,254
Due after five through ten years
   24,676    24,753
Due after ten years
   41,433    41,295




Total debt securitiesavailable-for-sale
   $ 86,317    $ 86,297




Held-to-maturity

Due after one through five years
   $ 3,485    $ 3,473
Due after ten years
   16,172    16,223




Total debt securitiesheld-to-maturity
   $ 19,657    $ 19,696

(Dollars in thousands)	Amortized cost		Fair value
Available-for-sale
Due in one year or less	$	5,285	$	5,283
Due after one through five years		11,542		11,649
Due after five through ten years		18,308		18,465
Due after ten years		72,316		72,866
Total debt securities available-for-sale	$	107,451	$	108,263
Held-to-maturity
Due after one through five years	$	3,000	$	3,008
Due after ten years		8,242		8,534
Total debt securities held-to-maturity	$	11,242	$	11,542

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES (CONTINUED)

Securities with a fair value of approximately ~~$77.3~~$87.6 million and ~~$83.4~~$80.3 million were pledged at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, 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 ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. Federal Reserve Bank stock was $471 thousand at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

There were no proceeds from sales of securities for the three ~~or six~~ month periods ending ~~June 30, 2019~~March 31, 2020 and ~~2018.~~

~~CSB BANCORP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 2 – SECURITIES~~~~(CONTINUED)~~

2019. All gains and losses recognized on equity securities during the three month periods were unrealized.

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 ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:


	Securities in a continuous unrealized loss position												Securities in a continuous unrealized loss position
	Less than 12 months				12 months or more				Total				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		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value
June 30, 2019
March 31, 2020
Available-for-sale
U.S. Treasury security	$	2	$	988	$	—	$	—	$	2	$	988
Mortgage-backed securities of government agencies													$	(208	)	$	27,404	$	(17	)	$	2,496	$	(225	)	$	29,900
Asset-backed securities of government agencies														—			—		(105	)		805		(105	)		805
Corporate bonds														(7	)		3,009		(290	)		3,686		(297	)		6,695
Total temporarily impaired securities													$	(215	)	$	30,413	$	(412	)	$	6,987	$	(627	)	$	37,400
December 31, 2019
Available-for-sale
U.S. Government agencies		—		—		32		7,318		32		7,318		—			—	$	(4	)	$	3,496	$	(4	)	$	3,496
Mortgage-backed securities of government agencies		38		4,370		153		15,488		191		19,858	$	(74	)	$	22,702		(71	)		8,924		(145	)		31,626
Asset-backed securities of government agencies		—		—		12		975		12		975		—			—		(17	)		917		(17	)		917
State and political subdivisions		—		—		5		1,292		5		1,292		—			—		(1	)		653		(1	)		653
Corporate bonds		—		—		281		3,693		281		3,693		—			—		(262	)		3,712		(262	)		3,712
Held-to-maturity
U.S. Government agencies		—		—		41		6,958		41		6,958		—			—		(6	)		4,993		(6	)		4,993
Mortgage-backed securities of government agencies		17		446		59		3,034		76		3,480		—			—		(56	)		3,009		(56	)		3,009

Total temporarily impaired securities	$	57	$	5,804	$	583	$	38,758	$	640	$	44,562	$	(74	)	$	22,702	$	(417	)	$	25,704	$	(491	)	$	48,406

December 31, 2018
Available-for-sale
U.S. Treasury security	$	1	$	996	$	—	$	—	$	1	$	996
U.S. Government agencies		—		—		180		7,170		180		7,170
Mortgage-backed securities of government agencies		33		4,206		851		35,188		884		39,394
Asset-backed securities of government agencies		16		1,024		—		—		16		1,024
State and political subdivisions		9		3,326		197		8,626		206		11,952
Corporate bonds		131		5,014		203		3,298		334		8,312
Held-to-maturity
U.S. Government agencies		—		—		390		8,609		390		8,609
Mortgage-backed securities of government agencies		72		3,404		142		3,360		214		6,764

Total temporarily impaired securities	$	262	$	17,970	$	1,963	$	66,251	$	2,225	$	84,221

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES (CONTINUED)

There were 42twenty-four securities in an unrealized loss position at ~~June 30, 2019, 36~~March 31, 2020, nine 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 ~~June 30, 2019.~~

March 31, 2020.

~~CSB BANCORP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE~~Note 3 – ~~LOANS~~Loans

Loans consist of the following:


(Dollars in thousands)	June 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Commercial	$	140,411	$	146,875	$	139,964	$	137,114
Commercial real estate		202,661		183,605		192,387		196,748
Residential real estate		174,635		167,296		177,404		174,259
Construction & land development		12,460		31,227		26,516		23,960
Consumer		19,899		19,402		18,598		19,052

Total loans before deferred costs		550,066		548,405		554,869		551,133
Deferred loan costs		546		569		451		500

Total Loans	$	550,612	$	548,974	$	555,320	$	551,633

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 andnon-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.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – LOANS (CONTINUED)

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

With respect to loans to developers and builders that are secured bynon-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.

~~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 bepre-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 byon-site inspections and are considered to have higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, governmental regulation of real property, general economic conditions, and the availability of long-term financing.

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

The Company maintains an independent 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 ~~$94.9~~$88.1 million and ~~$92.3~~$95.7 million at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

Concentrations of Credit

Nearly all of the Company’s lending activity occurs within the state of Ohio, including the four counties of Holmes, Stark, Tuscarawas and Wayne, as well as other markets. The majority of the Company’s loan portfolio consists of commercial and commercial real estate loans. As of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, 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 six~~ months ended ~~June 30, 2019~~March 31, 2020 and ~~2018.~~2019. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3 – LOANS (CONTINUED)

For ~~2019,~~the three-month period ended March 31, 2020 the increased allocation across all categories was primarily related to worsening economic conditions and the increasing unemployment rate at the end of March associated with the COVID-19 pandemic.

The decrease in the provision for loan losses for the three months ended March 31, 2019 related to commercial loans ~~reflected an additional allocation for loans within the hardwood industry that are affected by trade tariffs, which~~ was ~~offset by~~primarily due to a ~~first quarter~~ recovery related to one loan ~~relationship.~~relationship which contributed to declining historical losses of loans in this category. The decrease in the provision ~~for commercial real estate~~related to construction and land development loans was ~~increased~~primarily due to ~~recognize~~the decrease in loan ~~volume increases~~balances as ~~loans~~construction projects were completed and transferred ~~from construction~~ to permanent financing. The increase in the provision for consumer loans was ~~primarily due~~related to increasing charge-offs as well as an increase in historical losses partially offset by lower delinquencies.

The increase in the provision for loan losses for the six months ended June 30, 2018 related to commercial loans was primarily due to the increase in substandard loans in this category. The decrease in the provision related to commercial real estate loans is due to the decrease of loan delinquencies in this category. The increase in the provision related to consumer loans is primarily due to the increase loan volume and charge-offs of loans in this category.

~~CSB BANCORP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 3 – LOANS~~~~(CONTINUED)~~

~~Summary~~Summary of Allowance for Loan Losses


(Dollars in thousands)	Commercial			Commercial Real Estate			Residential Real Estate			Construction & Land Development			Consumer			Unallocated			Total			Commercial			Commercial Real Estate		Residential Real Estate			Construction & Land Development			Consumer			Unallocated			Total
Three months ended June 30, 2019
Three months ended March 31, 2020
Beginning balance	$	1,997		$	1,808		$	1,222		$	170		$	325		$	765		$	6,287		$	2,408		$	2,153	$	1,152		$	203		$	481		$	620		$	7,017
Provision for loan losses		277			138			5			(66	)		46			(115	)		285			212			147		209			52			87			(529	)		178
Charge-offs		(11	)		—			—			—			(43	)					(54	)		(15	)		—		(15	)		—			(57	)					(87	)
Recoveries		4			—			2			—			13						19			4			—		1			—			7						12

Net charge-offs		(7	)		—			2			—			(30	)					(35	)		(11	)		—		(14	)		—			(50	)					(75	)

Ending balance	$	2,267		$	1,946		$	1,229		$	104		$	341		$	650		$	6,537		$	2,609		$	2,300	$	1,347		$	255		$	518		$	91		$	7,120

Six months ended June 30, 2019
Three months ended March 31, 2019
Beginning balance	$	2,178		$	1,791		$	1,245		$	258		$	306		$	129		$	5,907		$	2,178		$	1,791	$	1,245		$	258		$	306		$	129		$	5,907
Provision for loan losses		(62	)		155			(19	)		(154	)		129			521			570			(339	)		17		(24	)		(88	)		83			636			285
Charge-offs		(16	)		0			0			0			(108	)					(124	)		(5	)		—		—			—			(65	)					(70	)
Recoveries		167			0			3			0			14						184			163			-		1			-			1						165

Net recoveries		151			0			3			0			(94	)					60

Net (charge-offs) recoveries																							158			-		1			-			(64	)					95
Ending balance	$	2,267		$	1,946		$	1,229		$	104		$	341		$	650		$	6,537		$	1,997		$	1,808	$	1,222		$	170		$	325		$	765		$	6,287

Three months ended June 30, 2018
Beginning balance	$	1,884		$	1,699		$	1,196		$	244		$	188		$	422		$	5,633
Provision for loan losses		(31	)		(87	)		39			35			107			261			324
Charge-offs		(9	)		—			—			—			(36	)					(45	)
Recoveries		5			—			1			—			—						6

Net charge-offs		(4	)		0			1			—			(36	)					(39	)

Ending balance	$	1,849		$	1,612		$	1,236		$	279		$	259		$	683		$	5,918

Six months ended June 30, 2018
Beginning balance	$	1,813		$	1,735		$	1,273		$	237		$	175		$	371		$	5,604
Provision for loan losses		226			(61	)		(1	)		42			130			312			648
Charge-offs		(203	)		(62	)		(37	)		—			(46	)					(348	)
Recoveries		13			—			1			—			—						14

Net charge-offs		(190	)		(62	)		(36	)		—			(46	)					(334	)

Ending balance	$	1,849		$	1,612		$	1,236		$	279		$	259		$	683		$	5,918

~~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 class, based on the impairment method as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:


(Dollars in thousands)	Commercial		Commercial Real Estate		Residential Real Estate		Construction		Consumer		Unallocated		Total		Commercial			Commercial Real Estate		Residential Real Estate		Construction		Consumer		Unallocated		Total
June 30, 2019
March 31, 2020
Allowance for loan losses:
Individually evaluated for impairment	$	16	$	16	$	1	$	—	$	—	$	—	$	33	$	10		$	18	$	1	$	—	$	—	$	—	$	29
Collectively evaluated for impairment		2,251		1,930		1,228		104		341		650		6,504		2,599			2,282		1,346		255		518		91		7,091

Total ending allowance balance	$	2,267	$	1,946	$	1,229	$	104	$	341	$	650	$	6,537	$	2,609		$	2,300	$	1,347	$	255	$	518	$	91	$	7,120

Loans:
Loans individually evaluated for impairment	$	2,547	$	2,597	$	880	$	—	$	15			$	6,039	$	2,497		$	2,577	$	834	$	—	$	—			$	5,908
Loans collectively evaluated for impairment		137,864		200,064		173,755		12,460		19,884				544,027		137,467			189,810		176,570		26,516		18,598				548,961

Total ending loans balance	$	140,411	$	202,661	$	174,635	$	12,460	$	19,899			$	550,066	$	139,964		$	192,387	$	177,404	$	26,516	$	18,598			$	554,869

December 31, 2018
December 31, 2019
Allowance for loan losses:
Individually evaluated for impairment	$	36	$	64	$	1	$	—	$	—	$	—	$	101	$	16		$	17	$	1	$	—	$	—	$	—	$	34
Collectively evaluated for impairment		2,142		1,727		1,244		258		306		129		5,806		2,392			2,136		1,151		203		481		620		6,983

Total ending allowance balance	$	2,178	$	1,791	$	1,245	$	258	$	306	$	129	$	5,907	$	2,408		$	2,153	$	1,152	$	203	$	481	$	620	$	7,017

Loans:
Loans individually evaluated for impairment	$	419	$	2,403	$	1,030	$	—	$	—			$	3,852	$	2,555		$	2,637	$	853	$	—	$	14			$	6,059
Loans collectively evaluated for impairment		146,456		181,202		166,266		31,227		19,402				544,553		134,559	��		194,111		173,406		23,960		19,038				545,074

Total ending loans balance	$	146,875	$	183,605	$	167,296	$	31,227	$	19,402			$	548,405	$	137,114		$	196,748	$	174,259	$	23,960	$	19,052			$	551,133

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~NOTE~~Note 3 – LOANS(CONTINUED)

The following table presents loans individually evaluated for impairment by class of loans as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:


(Dollars in thousands)	Unpaid Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total recorded investment¹		Related Allowance		Unpaid Principal Balance		Recorded Investment with no Allowance		Recorded Investment with Allowance		Total recorded investment¹		Related Allowance
June 30, 2019
March 31, 2020
Commercial											$	2,924	$	2,489	$	10	$	2,499	$	10
Commercial real estate												2,921		2,416		170		2,586		18
Residential real estate												1,010		577		259		836		1
Total impaired loans											$	6,855	$	5,482	$	439	$	5,921	$	29
December 31, 2019
Commercial	$	2,944	$	2,533	$	16	$	2,549	$	16	$	2,982	$	2,541	$	16	$	2,557	$	16
Commercial real estate		2,850		2,463		143		2,606		16		2,952		2,471		176		2,647		17
Residential real estate		1,045		618		264		882		1		1,024		457		396		853		1
Consumer		15		15		—		15		—		14		14		—		14		—

Total impaired loans	$	6,854	$	5,629	$	423	$	6,052	$	33	$	6,972	$	5,483	$	588	$	6,071	$	34

December 31, 2018
Commercial	$	815	$	383	$	36	$	419	$	36
Commercial real estate		2,616		1,976		433		2,409		64
Residential real estate		1,190		763		269		1,032		1

Total impaired loans	$	4,621	$	3,122	$	738	$	3,860	$	101

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

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

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


	Three months				Six months
	ended June 30,				ended June 30,				Three Months Ended March 31,
(Dollars in thousands)	2019		2018		2019		2018		2020		2019
Average recorded investment:
Commercial	$	1,582	$	1,190	$	1,228	$	1,491	$	2,453	$	861
Commercial real estate		2,152		2,700		2,233		3,595		2,556		2,289
Residential real estate		943		1,131		986		1,287		846		1,018
Consumer		15		—		9		—		9		3

Average recorded investment in impaired loans	$	4,692	$	5,021	$	4,447	$	6,373	$	5,864	$	4,171

Interest income recognized:
Commercial	$	28	$	10	$	37	$	21	$	18	$	13
Commercial real estate		3		4		6		8		2		3
Residential real estate		12		12		23		26		10		12
Consumer		—		—		—		—

Interest income recognized on a cash basis on impaired loans	$	43	$	26	$	66	$	55	$	30	$	28

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~NOTE~~Note 3 – LOANS(CONTINUED)

The following table presents the aging of past due loans and nonaccrual loans as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 by class of loans:

																	Accruing 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		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
June 30, 2019
March 31, 2020
Commercial	$	138,892	$	26	$	56	$	71	$	1,366	$	1,519	$	140,411	$	138,544	$	104	$	—	$	—	$	1,316	$	1,420	$	139,964
Commercial real estate		200,149		169		—		—		2,343		2,512		202,661		189,953		80		—		—		2,354		2,434		192,387
Residential real estate		173,262		703		—		113		557		1,373		174,635		176,176		357		207		2		662		1,228		177,404
Construction & land development		12,460		—		—		—		—		—		12,460		26,516		—		—		—		—		—		26,516
Consumer		19,601		226		25		7		40		298		19,899		18,344		198		21		—		35		254		18,598

Total Loans	$	544,364	$	1,124	$	81	$	191	$	4,306	$	5,702	$	550,066	$	549,533	$	739	$	228	$	2	$	4,367	$	5,336	$	554,869

December 31, 2018
December 31, 2019
Commercial	$	146,431	$	253	$	34	$	—	$	157	$	444	$	146,875	$	135,707	$	15	$	—	$	67	$	1,325	$	1,407	$	137,114
Commercial real estate		181,388		86		—		—		2,131		2,217		183,605		194,157		186		—		—		2,405		2,591		196,748
Residential real estate		165,837		265		213		174		807		1,459		167,296		173,023		264		277		174		521		1,236		174,259
Construction & land development		31,169		58		—		—		—		58		31,227		23,960		—		—		—		—		—		23,960
Consumer		18,965		291		86		—		60		437		19,402		18,640		365		—		—		47		412		19,052

Total Loans	$	543,790	$	953	$	333	$	174	$	3,155	$	4,615	$	548,405	$	545,487	$	830	$	277	$	241	$	4,298	$	5,646	$	551,133

~~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 $2.4 million as of ~~June 30, 2019,~~March 31, 2020, and ~~$1.5~~$2.5 million as of December 31, ~~2018,~~2019, with ~~$17~~$18 thousand of specific reserves allocated to those loans at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. At ~~June 30, 2019, $2.2~~March 31, 2020, $2.1 million of the loans classified as TDR’s were performing in accordance with their modified terms. Of the remaining ~~$266~~$252 thousand, all were in nonaccrual of interest status.

Other real estate owned amounted to one property at $99 thousand at June 30, 2019 and December 31, 2018, respectively. There were no consumer mortgage loans in the process of foreclosure at June 30, 2019 and $57 thousand at December 31, 2018. There were no other repossessed assets at June 30, 2019 and December 31, 2018.


(Dollars in thousands)	Number of loans restructured		Pre-Modification Recorded Investment		Post-Modification Recorded Investment		Number of loans restructured	Pre- Modification Recorded Investment		Post- Modification Recorded Investment
For the six months ended June 30, 2019
For the Three months ended March 31, 2020
Commercial		1	$	17	$	17	1	$	69	$	69

Total Restructured Loans		1	$	17	$	17	1	$	69	$	69

For the three months ended June 30, 2018
Commercial		1	$	200	$	200

For the Three months ended March 31, 2019
Consumer							1	$	17	$	17
Total Restructured Loans		1	$	200	$	200	1	$	17	$	17

For the six months ended June 30, 2018
Commercial Real Estate		1	$	200	$	200

Total Restructured Loans		1	$	200	$	200

The loans restructured were modified by changing the monthly payment to interest only and extending the maturity dates. There ~~were no~~was one new TDR’s for the three month period ended ~~June 30, 2019.~~March 31, 2020.

None of the loans restructured in 2019 defaulted in the first quarter of 2020. There was one loan in the amount of $200 thousand restructured in 2018 that ~~has~~ subsequently defaulted in in the first quarter of 2019. ~~None of the loans restructured in 2017 defaulted in 2018.~~

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~NOTE~~Note 3 – LOANS(CONTINUED)

Other real estate owned amounted to one property at $99 thousand at March 31, 2020 and December 31, 2019, respectively. There were $44 thousand in consumer mortgage loans in the process of foreclosure at March 31, 2020 and $50 thousand at December 31, 2019. There were no other repossessed assets at March 31, 2020 and December 31, 2019.

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~~$500 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~~(Cash Secured, Exceptional, Acceptable, Monitor, or Pass Watch) may exhibit a wide array of characteristics but at a minimum represent an acceptable risk to the Bank. Borrowers in this rating may have leveraged but acceptable balance sheet positions, satisfactory asset quality, stable to favorable sales and earnings trends, acceptable liquidity and adequate cash flow. Loans are considered fully collectible and require an average amount of administration. While generally adhering to credit policy, these loans may exhibit occasional exceptions that do not result in undue risk to the Bank. Borrowers are generally capable of absorbing setbacks, financial and otherwise, without the threat of failure.

Special Mention. ~~Loans~~Assets assigned a Special Mention grade are not considered classified ~~as special mention have material~~assets but are considered criticized. These assets exhibit potential weaknesses that, deserve management’s close attention. If left uncorrected, ~~these~~those potential weaknesses may result in deterioration of the repayment prospects for the ~~loan~~asset or in the Bank’s credit position at some future date. Loans in this rating warrant special attention but have not yet reached the point of concern for loss. These assets have deteriorated sufficiently to the point they would have difficulty refinancing elsewhere. Similarly, purchasers of the business would not be eligible for bank financing unless they represent a significantly stronger credit risk.

Substandard. Loans classified as substandard are inadequately protected by the current ~~net~~sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently ~~existing~~known 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~~$500 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 ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018:~~2019:

(Dollars in thousands)
   Pass    Special
Mention    Substandard    Doubtful    Not Rated    Total
June 30, 2019

Commercial
   $ 115,162    $ 10,323    $ 14,000    $ —      $ 926    $ 140,411
Commercial real estate
   183,259    7,234    11,682    —      486    202,661
Residential real estate
   188    —      68    —      174,379    174,635
Construction & land development
   9,843    —      115    —      2,502    12,460
Consumer
   —      —      50    —      19,849    19,899












Total
   $ 308,452    $ 17,557    $ 25,915    $ —      $ 198,142    $ 550,066












December 31, 2018

Commercial
   $ 125,840    $ 5,383    $ 14,775    $ —      $ 877    $ 146,875
Commercial real estate
   163,261    5,582    13,578    —      1,184    183,605
Residential real estate
   194    —      637    —      166,465    167,296
Construction & land development
   27,540    —      —      —      3,687    31,227
Consumer
   —      —      60    —      19,342    19,402












Total
   $ 316,835    $ 10,965    $ 29,050    $ —      $ 191,555    $ 548,405

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~NOTE~~Note 3 – LOANS(CONTINUED)

(Dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Not Rated		Total
March 31, 2020
Commercial	$	112,315	$	8,402	$	18,190	$	—	$	1,057	$	139,964
Commercial real estate		170,352		7,221		13,615		—		1,199		192,387
Residential real estate		180		—		243		—		176,981		177,404
Construction & land development		22,626		99		—		—		3,791		26,516
Consumer		—		—		78		—		18,520		18,598
Total	$	305,473	$	15,722	$	32,126	$	—	$	201,548	$	554,869
December 31, 2019
Commercial	$	110,731	$	15,040	$	10,295	$	—	$	1,048	$	137,114
Commercial real estate		174,045		11,546		9,994		—		1,163		196,748
Residential real estate		183		—		237		—		173,839		174,259
Construction & land development		19,423		104		—		—		4,433		23,960
Consumer		—		—		73		—		18,979		19,052
Total	$	304,382	$	26,690	$	20,599	$	—	$	199,462	$	551,133

The following table presents loans that are not rated by class of loans as of ~~June 30, 2019~~March 31, 2020 and December 31, 2019. Nonperforming loans include loans past due 90 days or more and loans on nonaccrual of interest status.


(Dollars in thousands)	Performing		Non-Performing		Total		Performing		Non- Performing		Total
June 30, 2019
March 31, 2020
Commercial	$	926	$	—	$	926	$	1,057	$	—	$	1,057
Commercial real estate		486		—		486		1,199		—		1,199
Residential real estate		173,772		607		174,379		176,574		407		176,981
Construction & land development		2,502		—		2,502		3,791		—		3,791
Consumer		19,849		—		19,849		18,520		—		18,520

Total	$	197,535	$	607	$	198,142	$	201,141	$	407	$	201,548

December 31, 2018
December 31, 2019
Commercial	$	877	$	—	$	877	$	1,048	$	—	$	1,048
Commercial real estate		1,184		—		1,184		1,163		—		1,163
Residential real estate		166,122		343		166,465		173,407		432		173,839
Construction & land development		3,687		—		3,687		4,433		—		4,433
Consumer		19,342		—		19,342		18,979		—		18,979

Total	$	191,212	$	343	$	191,555	$	199,030	$	432	$	199,462

NOTE 4 – SHORT-TERM BORROWINGS

The following table provides additional detail regarding repurchase agreements and the related collateral accounted for as secured borrowings.

					Remaining Contractual Maturity Overnight and Continuous
	Remaining Contractual Maturity Overnight and Continuous				March 31,		December 31,
(Dollars in thousands)	June 30, 2019		December 31, 2018		2020		2019
Securities of U.S. Government Agencies and mortgage-backed securities of government agencies pledged, fair value	$	35,652	$	37,574	$	40,807	$	39,058
Repurchase agreements		35,474		37,415		40,605		38,889

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.

~~CSB BANCORP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE~~5- ~~FAIR VALUE MEASUREMENTS~~~~(CONTINUED)~~

The following table presents the assets reported on the Consolidated Balance Sheets at their fair value on a recurring basis as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 by level within the fair value hierarchy. No liabilities are carried at fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Equity securities with readily determinable values and U.S. Treasury Notes are valued at the closing price reported on the active market on which the individual securities are traded. Obligations of U.S. government agencies, mortgage-backed securities, asset-backed securities, obligations of states and political subdivisions and corporate bonds are valued at observable market data for similar assets. Equity securities without readily determinable values are carried at amortized cost adjusted for impairment and observable price changes.


(Dollars in thousands)	Level I		Level II		Level III		Total		Level I		Level II		Level III		Total
June 30, 2019
March 31, 2020
Assets:
Securitiesavailable-for-sale
U.S. Treasury security	$	988	$	—	$	—	$	988	$	1,020	$	—	$	—	$	1,020
U.S. Government agencies		—		7,318		—		7,318		—		2,003		—		2,003
Mortgage-backed securities of government agencies		—		46,223		—		46,223		—		75,207		—		75,207
Asset-backed securities of government agencies		—		975		—		975		—		805		—		805
State and political subdivisions		—		23,429		—		23,429		—		20,957		—		20,957
Corporate bonds		—		7,364		—		7,364		—		8,271		—		8,271

Totalavailable-for-sale securities	$	988	$	85,309	$	—	$	86,297	$	1,020	$	107,243	$	—	$	108,263
Equity securities	$	41	$	—	$	46	$	87	$	33	$	—	$	—	$	33
December 31, 2018

December 31, 2019
Assets:
Securitiesavailable-for-sale
U.S. Treasury security	$	996	$	—	$	—	$	996	$	999	$	—	$	—	$	999
U.S. Government agencies		—		7,170		—		7,170		—		5,496		—		5,496
Mortgage-backed securities of government agencies		—		44,901		—		44,901		—		75,857		—		75,857
Asset-backed securities of government agencies		—		1,024		—		1,024		—		917		—		917
State and political subdivisions		—		23,125		—		23,125		—		21,511		—		21,511
Corporate bonds		—		8,312		—		8,312		—		7,366		—		7,366

Totalavailable-for-sale securities	$	996	$	84,532	$	—	$	85,528	$	999	$	111,147	$	—	$	112,146
Equity securities	$	37	$	—	$	46	$	83	$	46	$	—	$	—	$	46

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5 – FAIR VALUE MEASUREMENTS – (CONTINUED)

The following table presents the assets measured on a nonrecurring basis on the Consolidated Balance Sheets at their fair value as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, by level within the fair value hierarchy. ~~Impaired loans are~~An impaired loan is written down to fair value through the establishment of specific ~~reserves.~~reserves or a charge down is taken to reduce the loan to fair value of the collateral (less estimated selling costs) and the loan is included in the following table as a Level III measurement. Techniques used to value the collateral that secure the impaired loans ~~include:~~include quoted market prices for identical assets classified as Level I ~~inputs;~~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.

(Dollars in thousands)	Level I		Level II		Level III		Total
March 31, 2020
Assets measured on a nonrecurring basis:
Other real estate owned	$	—	$	—	$	99	$	99

December 31, 2019
Assets measured on a nonrecurring basis:
Impaired loans	$	—	$	—	$	553	$	553
Other real estate owned		—		—		99		99

~~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
June 30, 2019

Assets measured on a nonrecurring basis:

Impaired loans
   $ —      $ —      $ 389    $ 389
Other real estate owned
   —      —      99    99
December 31, 2018

Assets measured on a nonrecurring basis:

Impaired loans
   $ —      $ —      $ 636    $ 636
Other real estate owned
   —      —      99    99

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:~~value. As of March 31, 2020 there were no impaired loans carried at fair value under the methods described above.

   Quantitative Information about Level III Fair Value Measurements
   Fair Value    Valuation    Unobservable    Range
(Dollars in thousands)    Estimate
Techniques

Input

(Weighted Average)
June 30, 2019

Impaired loans
   $ 389    Discounted cash flow    Remaining term Discount rate
8.5 mos to 26 yrs / ( 15 yrs)
5.1% to 7.5% / (5.7%)
Other real estate owned
   99    Appraisal of collateral⁽¹⁾
Appraisal adjustments ⁽²⁾
Liquidation expense⁽²⁾
   -33%-10%
December 31, 2018

Impaired loans
   $ 636    Discounted cash flow    Remaining term Discount rate    1.2 yrs to 26.5 yrs / (10.9 yrs) 5.1% to 7.5% / (5.88%)
Other real estate owned
   99    Appraisal of collateral⁽¹⁾
Appraisal adjustments⁽²⁾
Liquidation expense⁽²⁾
   -33%-10%

Quantitative Information about Level III Fair Value Measurements

(Dollars in thousands)

Fair Value

Estimate

Valuation

Techniques

Unobservable

Input

Range

(Weighted Average)

March 31, 2020

Appraisal adjustments ²

-33

Other real estate

owned

Appraisal of collateral ¹

Liquidation expense ²

-10

December 31, 2019

Remaining term

3.9 yrs to 26.9 yrs / (16 yrs)

Impaired loans

553

Discounted cash flow

Discount rate

3.5% to 6.0% / (5.3%)

Appraisal adjustments ²

-33

Other real estate

owned

Appraisal of collateral ¹

Liquidation expense ²

-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. The range of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6 – FAIR VALUES OF FINANCIAL INSTRUMENTS

The fair values of recognized financial instruments as of ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 are as follows:

(Dollars in thousands)
   Carrying
Value    Level I    Level II    Level III    Fair Value
June 30, 2019

Financial assets

Cash and cash equivalents
   $ 57,277    $ 57,277    $ —      $ —      $ 57,277
Securitiesavailable-for-sale
   86,297    988    85,309    —      86,297
Securitiesheld-to-maturity
   19,657    —      19,696    —      19,696
Equity securities
   87    41    —      46    87
Restricted stock
   4,614    N/A    N/A    N/A    N/A
Loans held for sale
   409    409    —      —      409
Net loans
   544,075    —      —      554,080    554,080
Bank-owned life insurance
   16,760    16,760    —      —      16,760
Accrued interest receivable
   1,671    1,671    —      —      1,671
Mortgage servicing rights
   296    —      —      296    296
Financial liabilities

Deposits
   $ 623,328    $ 498,967    $ —      $ 124,093    $ 623,060
Short-term borrowings
   35,474    35,474    —      —      35,474
Other borrowings
   6,576    —      —      6,508    6,508
Accrued interest payable
   125    125    —         125
December 31, 2018

Financial assets

Cash and cash equivalents
   $ 45,564    $ 45,564    $ —      $ —      $ 45,564
Securitiesavailable-for-sale
   85,528    996    84,532    —      85,528
Securitiesheld-to-maturity
   20,688    —      20,118    —      20,118
Equity securities
   83    37    —      46    83
Restricted stock
   4,614    N/A    N/A    N/A    N/A
Loans held for sale
   108    108    —      —      108
Net loans
   543,067    —      —      543,076    543,076
Bank-owned life insurance
   13,554    13,554    —      —      13,554
Accrued interest receivable
   1,581    1,581    —      —      1,581
Mortgage servicing rights
   281    —      —      281    281
Financial liabilities

Deposits
   $ 606,498    $ 490,007    $ —      $ 114,434    $ 604,441
Short-term borrowings
   37,415    37,415    —      —      37,415
Other borrowings
   8,525    —      —      8,251    8,251
Accrued interest payable
   88    88    —      —      88

(Dollars in thousands)	Carrying Value		Level I		Level II		Level III		Fair Value
March 31, 2020
Financial assets
Cash and cash equivalents	$	96,272	$	96,272	$	—	$	—	$	96,272
Securities available-for-sale		108,263		1,020		107,243		—		108,263
Securities held-to-maturity		11,242		—		11,542		—		11,542
Equity securities		79		33		—		46		79
Restricted stock		4,614	N/A		N/A		N/A		N/A
Loans held for sale		256		256		—		—		256
Net loans		548,200		—		—		549,544		549,544
Bank-owned life insurance		19,023		19,023		—		—		19,023
Accrued interest receivable		1,611		1,611		—		—		1,611
Mortgage servicing rights		330		—		—		330		330
Financial liabilities
Deposits	$	671,162	$	544,849	$	—	$	128,022	$	672,871
Short-term borrowings		40,605		40,605		—		—		40,605
Other borrowings		6,206		—		—		6,326		6,326
Accrued interest payable		119		119		—		—		119

December 31, 2019
Financial assets
Cash and cash equivalents	$	102,017	$	102,017	$	—	$	—	$	102,017
Securities available-for-sale		112,146		999		111,147		—		112,146
Securities held-to-maturity		13,869		—		13,950		—		13,950
Equity securities		92		46		—		46		92
Restricted stock		4,614	N/A		N/A		N/A		N/A
Loans held for sale		622		622		—		—		622
Net loans		544,616		—		—		542,981		542,981
Bank-owned life insurance		18,894		18,894		—		—		18,894
Accrued interest receivable		1,641		1,641		—		—		1,641
Mortgage servicing rights		328		—		—		328		328
Financial liabilities
Deposits	$	683,546	$	555,985	$	—	$	127,440	$	683,425
Short-term borrowings		38,889		38,889		—		—		38,889
Other borrowings		6,330		—		—		6,273		6,273
Accrued interest payable		127		127		—		—		127

~~CSB BANCORP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~NOTE 6 – FAIR VALUES OF FINANCIAL INSTRUMENTS~~~~(CONTINUED)~~

The Company also has unrecognized financial instruments at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019. These financial instruments relate to commitments to extend credit and letters of credit. The aggregated contract amount of such financial instruments was approximately ~~$190~~$207.1 million at ~~June 30, 2019~~March 31, 2020 and ~~$173.3~~$211.3 million at December 31, ~~2018.~~2019. Such amounts are also considered to be the fair values.

The fair value estimates of financial instruments are made at a specific point in time based on relevant market information. Since no ready market exists for a significant portion of the financial instruments, fair value estimates are largely based on judgments after considering such factors as future expected credit losses, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

~~NOTE~~22

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 six month~~ period ended ~~June 30, 2019~~March 31, 2020 and ~~2018:~~2019:

(Dollars in thousands)
   Pretax    Tax Effect    After-tax
Three months ended June 30, 2019

Balance as of March 31, 2019
   $ (1,022 )    $ 214    $ (808 )
Unrealized holding gain on available-for-sale securities arising during the period
   762    (160 )    602
Amortization of held-to-maturity discount resulting from transfer
   15    (3 )    12






Total other comprehensive income
   777    (163 )    614






Balance as of June 30, 2019
   $ (245 )    $ 51    $ (194 )






Six months ended June 30, 2019

Balance as of December 31, 2018
   $ (1,786 )    $ 374    $ (1,412 )
Unrealized holding gain on available-for-sale securities arising during the period
   1,511    (317 )    1,194
Amortization of held-to-maturity discount resulting from transfer
   30    (6 )    24






Total other comprehensive income
   1,541    (323 )    1,218






Balance as of June 30, 2019
   $ (245 )    $ 51    $ (194 )






Three months ended June 30, 2018

Balance as of March 31, 2018
   $ (2,165 )    $ 454    $ (1,711 )
Unrealized holding loss on available-for-sale securities arising during the period
   (156 )    33    (123 )
Amortization of held-to-maturity discount resulting from transfer
   20    (4 )    16






Total other comprehensive loss
   (136 )    29    (107 )






Balance as of June 30, 2018
   $ (2,301 )    $ 483    $ (1,818 )






Six months ended June 30, 2018

Balance as of December 31, 2017
   $ (839 )    $ 176    $ (663 )
Unrealized holding loss on available-for-sale securities arising during the period
   (1,467 )    309    (1,158 )
Reclassify equity AOCI gain to retained earnings
   (36 )    7    (29 )
Amortization of held-to-maturity discount resulting from transfer
   41    (9 )    32






Total other comprehensive loss
   (1,462 )    307    (1,155 )






Balance as of June 30, 2018
   $ (2,301 )    $ 483    $ (1,818 )

(Dollars in thousands)	Pretax			Tax Effect			After-tax
Three months ended March 31, 2020
Balance as of December 31, 2019	$	92		$	(20	)	$	72
Unrealized holding gain on available-for-sale securities arising during the period		540			(113	)		427
Amortization of held-to-maturity discount resulting from transfer		14			(3	)		11
Total other comprehensive income		554			(116	)		438
Balance as of March 31, 2020	$	646		$	(136	)	$	510
Three months ended March 31,2019
Balance as of December 31, 2018		(1,786	)		374		$	(1,412	)
Unrealized holding gain on available-for-sale securities arising during the period		749			(157	)		592
Amortization of held-to-maturity discount resulting from transfer		15			(3	)		12
Total other comprehensive income		764			(160	)		604
Balance as of March 31, 2019	$	(1,022	)	$	214		$	(808	)

~~CSB BANCORP, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

NOTE 8 – ~~LEASES~~SUBSEQUENT EVENTS

~~Operating leases~~

Paycheck Protection Program

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020, and provides over $2 trillion in ~~which~~economic relief to individuals and businesses impacted by the ~~Company is~~COVID-19 pandemic. The CARES Act authorized the ~~lessee are recorded as operating lease Right~~Small Business Administration (“SBA”) to temporarily guarantee loans under a new 7(a) loan program called the Paycheck Protection Program (“PPP”). As a qualified SBA lender, we were automatically authorized to originate PPP loans. An eligible business can apply for a PPP loan up to the greater of: (1) 2.5 times its average monthly “payroll costs;” or (2) $10 million. PPP loans will have: (a) an interest rate of ~~Use (“ROU”) assets~~1.0%, (b) a two-year loan term to maturity; and ~~operating lease liabilities, included in other assets~~(c) principal and other liabilities, respectively, on the consolidated balance sheets. The Company does not currently have any finance leases. Operating lease ROU assets represent the right to use an underlying asset during the lease term and operating lease liabilities represent the obligation to make leaseinterest payments ~~arising~~deferred for six months from ~~the lease. The Company elected to adopt the transition method, which uses a modified retrospective transition approach. ROU assets and operating lease liabilities are recognized as of~~ the date of ~~adoption based on the present value~~disbursement. The SBA will guarantee 100% of the ~~remaining lease payments using a discount rate that represents the Company’s incremental borrowing rate at the date of initial application.~~

~~Operating lease expense, which is comprised of amortization~~PPP loans made to eligible borrowers. The entire principal amount of the ~~ROU asset~~borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP so long as employee and compensation levels of the ~~implicit interest accreted on~~business are maintained and 75% of the ~~operating lease liability, is recognized on a straight-line basis over~~loan proceeds are used for payroll expenses, with the ~~lease term, and is recorded in occupancy and equipment expense in~~remaining 25% of the ~~consolidated statements of income and~~loan proceeds used for other comprehensive income. The leases relate to bank branches with remaining lease terms of generally 7 to 8 years. Certain lease arrangements contain extension options which are typically 5 years at the then fair market rental rates. As these extension options are generally considered reasonably certain of exercise, they are included in the lease term.qualifying expenses.

As of ~~June 30, 2019, operating lease ROU assets~~May 5, 2020, we had disbursed approximately 667 loans for $91.6 million under the PPP.

Loan Modifications

As of May 5, we had modified 213 loans aggregating $65.7 million in loan principal, primarily consisting of three to four months deferral of principal and interest payments, and extension of maturity date. The classifications of loans modified were: 151 commercial loans totaling $61.7 million, 31 residential real estate loans totaling $3.4 million and 31 consumer loans totaling $559 thousand. All of the loans provided modifications were ~~$450 thousand and liabilities were $424 thousand. At June 30, 2019, CSB recognized $36 thousand~~performing in ~~operating lease cost.~~

~~The following table summarizes other information related to our operating leases:~~accordance with their terms.


~~June 30, 2019~~
~~Weighted-average remaining lease term - operating leases in years~~	~~7.2~~
~~Weighted-average discount rate - operating leases~~	~~3.77~~	%

~~The following table presents aggregate lease maturities and obligations as of June 30, 2019:~~

(Dollars in thousands)
June 30, 2019

2019
   $ 18
2020
   63
2021
   71
2022
   71
2023
   71
2024 and thereafter
   195


Total lease payments
   489


Less: interest
   65


Present value of lease liabilities
   $ 424

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 ~~June 30, 2019~~March 31, 2020 as compared to December 31, ~~2018,~~2019, and the consolidated results of operations for the three ~~and six~~ month ~~periods~~period ended ~~June 30, 2019~~March 31, 2020 compared to the same ~~periods~~period in ~~2018.~~2019. 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 ~~$750~~$810 million at ~~June 30, 2019~~ March 31, 2020 as compared to ~~$732~~$819 million at December 31, ~~2018.~~2019. During the ~~six~~three month period ended ~~June 30, 2019,~~March 31, 2020, net loans increased $1 $4 million. Cash and cash equivalents, and securities ~~increased~~decreased $12 million. Deposits and short-term borrowings decreased $11 million. ~~On the liability side, deposits and repurchase agreements increased by $15 million.~~

Net loans increased $1 $4 million, or ~~less than~~ 1%, ~~during the six months ended June, 30, 2019~~ as combined commercial real estate and construction loans decreased $2 million, or -1%, and residential real estate loans increased $3 million, or 2%, from December 31, 2019. Commercial loans increased $3 million, or 2%, as business lines of credits ~~decreased~~drew based on the improved cash flow of businesses within the bank’s markets. Commercial loans decreased $6 million, or 4%, while construction and land development loans decreased $19 million, contributing to the increase in commercial real estate loans by $19 million as construction loans moved to permanent financing. Residential real estate loans increased $7 million, or 4%, and consumer loans increased $497 thousand, or 3%, from December 31, 2018.normal seasonality. Consumers continued to refinance their mortgage loans for historically low long-term fixed rates while home purchase activity ~~has increased.~~ increased through the first half of March. Residential mortgage loan originations for the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 totaled ~~$28~~$13 million, ~~a decrease~~an increase from ~~$31~~$12.5 million in originations during the ~~six~~three month period ended ~~June 30, 2018.~~March 31, 2019. Originations sold into the secondary market were ~~$5.9~~$4.2 million and ~~$4.3~~$2.6 million, respectively during the ~~six~~three month periods ended ~~June 30, 2019~~March 31, 2020 and ~~June 30, 2018.~~March 31, 2019. 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 1.19% at June 30, 2019 as compared to 1.08% at December 31, 2018. Outstanding loan balances increased 1% to $551 million at June 30, 2019. The allowance for loan losses increased to $6.5 million at June 30, 2019 following a provision of $570 thousand and net loan recoveries of $60 thousand for the current six months ended June 30, 2019.

CSB BANCORP, INC.

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

~~Nonaccrual~~The allowance for loan losses increased $833 thousand from the year ago quarter to $7.1 million or 1.28% of total loans. The Company has not early adopted CECL which has been delayed for smaller reporting companies. Outstanding loan balances increased 1% to $555 million at March 31, 2020. Net charge-offs increased to $75 thousand, or an annualized 0.05% of average loans, in the current quarter compared to the $95 thousand recovery, or -0.07% in the year-ago quarter. We believe the allowance level is appropriate given the low level of problem loans and current composition of the overall loan portfolio.

Nonperforming loans increased to $4.4 million, or 0.79% of total loans from $3.2 million, or 0.58%, a year ago. The increase is a result of one commercial real estate credit facility for $1.5 million being placed on nonaccrual status during ~~the first six months of~~second quarter 2019. For the ~~six~~three months ending ~~June 30, 2019~~ March 31, 2020 loans totaling ~~$1.9 million~~$174 thousand were placed on nonaccrual status, there were ~~$32~~$26 thousand in charge-downs recognized, and pay downs of ~~$673~~$79 thousand were received.

										March 31,			December 31,			March 31,
(Dollars in thousands)	June 30, 2019			December 31, 2018			June 30, 2018			2020			2019			2019
Non-performing loans	$	4,497		$	3,329		$	4,399		$	4,369		$	4,539			3,188
Other real estate		99			99			—			99			99			99
Repossessed assets		—			—			—			—			20			15
Allowance for loan losses		6,537			5,907			5,918			7,120			7,017			6,287
Total loans		550,612			548,974			535,427			555,320			551,632			548,220
Allowance: Loans		1.19	%		1.08	%		1.11	%
Allowance:Non-performing loans		1.5	x		1.8	x		1.3	x
Allowance for loan losses as a percentage of total loans											1.28	%		1.27	%		1.15	%
Allowance for loan losses to total nonperforming loans										1.6x			1.5x			2.0x

The ratio of gross loans to deposits was ~~88.3%~~82.7% at ~~June 30, 2019,~~March 31, 2020, compared to ~~90.5%~~80.7% at December 31, ~~2018.~~2019.

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 ~~gains~~losses of ~~$53~~$627 thousand within theavailable-for-sale andheld-to-maturity portfolios as of ~~June 30, 2019,~~ March 31, 2020, 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 embedded security impairments on ~~June 30, 2019,~~March 31, 2020, are considered temporary and no impairment loss relating to these securities has been recognized.

Deposits ~~increased $17~~decreased $12 million, or 3%2%, from December 31, ~~2018~~2019 with noninterest bearing deposits decreasing approximately $5$9 million and interest-bearing deposit accounts ~~increasing~~decreasing approximately ~~$22~~$3 million. Total deposits as of ~~June 30, 2019~~March 31, 2020 are ~~$28~~$64 million greater than ~~June 30, 2018~~March 31, 2019 deposit balances. On a year over year comparison, increases were recognized in noninterest-bearing demand deposits of $2$11 million, interest-bearing demand deposits of ~~$13~~$38 million, money market accounts of $2$3 million, savings of $3$6 million, and time deposits of $8$6 million.

Short-term borrowings consisting of overnight repurchase agreements with retail customers ~~decreased $2~~increased $1 million to ~~$35~~$41 million at ~~June 30, 2019~~ March 31, 2020 as compared to December 31, ~~2018~~2019 and other borrowings decreased ~~$1.9 million~~$124 thousand as the Company repaid FHLB advances.

Total shareholders’ equity amounted to ~~$81~~$88 million, or ~~10.9%~~10.8%, of total assets at ~~June 30, 2019~~ March 31, 2020 up ~~slightly~~ from December 31, ~~2018.~~2019. The increase in shareholders’ equity during the ~~six~~three months ending ~~June 30, 2019~~ March 31, 2020 was due to net income of ~~$5.1~~$2.5 million and an increase in accumulated other comprehensive income of ~~$1.2 million~~$438 thousand offset by dividends declared of ~~$1.4 million.~~$768 thousand. The Company and the Bank met all regulatory capital requirements at ~~June 30, 2019.~~March 31, 2020.

RESULTS OF OPERATIONS

Three months ended ~~June 30,~~March 31, 2020 and 2019 ~~and 2018~~

For the quarters ended ~~June 30,~~March 31, 2020 and 2019, ~~and 2018,~~ the Company recorded net income of ~~$2.6~~$2.5 million and ~~$2.3~~$2.5 million and ~~$.94~~$0.91 and ~~$.85~~$0.93 per share, respectively. The ~~$262~~$57 thousand ~~increase~~decrease in net income for the ~~quarter~~period was primarily the result of a ~~$419~~$95 thousand ~~increase~~ decrease in net interest income and an increase of ~~$145~~$216 thousand in other noninterest expenses. The decreases were partially offset by an increase of $119 thousand in other noninterest income, ~~and~~ a decrease in the provision for loan losses of ~~$39 thousand. The increases were partially offset by an increase of $281~~$107 thousand ~~in other noninterest expenses~~ and a ~~$60~~$28 thousand ~~increase~~decrease in federal income tax ~~provision.~~provision.

~~Return on average assets and return on average equity were 1.39% and 12.91%, respectively, for the three month period of 2019, compared to 1.30% and 12.94%, respectively for the same quarter in 2018.~~25

CSB BANCORP, INC.

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

Return on average assets and return on average equity were 1.23% and 11.47%, respectively, for the three month period of 2020, compared to 1.41% and 13.20%, respectively for the same quarter in 2019.

Average Balance Sheets and Net Interest Margin Analysis

   For the three months ended June 30,
   2019 2018
(Dollars in thousands)
   Average
balance    Average
rate Average
balance    Average
rate
ASSETS

Fedeeral funds sold
   $ 212    2.08 % $ 621    1.74 %
Interest-earning deposits with other banks
   39,772    2.19 19,960    1.61
Taxable securities
   87,942    2.66 93,170    2.57
Tax-exempt securities
   23,322    2.92 26,096    2.92
Loans
   547,981    5.26 534,852    4.89





Total earning assets
   699,229    4.68 % 674,699    4.39 %
Other assets
   46,429    41,203





TOTAL ASSETS
   $ 745,658    $ 715,902





LIABILITIES AND SHAREHOLDERS’ EQUITY

Interest-bearing demand deposits
   $ 127,211    0.46 % $ 118,506    0.30 %
Savings deposits
   186,179    0.54 181,097    0.33
Time deposits
   124,001    1.69 116,824    1.11
Other borrowed funds
   44,803    1.15 52,592    1.01





Total interest bearing liabilities
   482,194    0.87 % 469,019    0.59 %
Non-interest bearing demand deposits
   180,167    172,784
Other liabilities
   2,959    2,060
Shareholders’ Equity
   80,338    72,039





TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 745,658    $ 715,902





Taxable equivalent net interest spread
      3.81 %    3.80 %
Taxable equivalent net interest margin
      4.08 %    3.98 %

	For the Three Months Ended March 31,
	2020							2019
(Dollars in thousands)	Average balance ¹		Interest		Average rate ²			Average balance ¹		Interest		Average rate ²
ASSETS
Federal funds sold	$	—	$	—		0.00	%	$	400	$	3		2.53	%
Interest-earning deposits		75,817		239		1.27			26,442		172		2.64
Taxable securities		104,474		609		2.34			87,058		586		2.73
Tax-exempt securities ⁴		21,186		151		2.87			23,132		170		2.98
Loans ^3,4		560,142		6,855		4.92			550,483		7,075		5.21
Total interest-earning assets		761,619		7,854		4.15	%		687,515		8,006		4.72	%
Noninterest-earning assets		50,790							42,666
TOTAL ASSETS	$	812,409						$	730,181

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing demand deposits	$	160,932		143		0.36	%		118,844		113		0.39	%
Savings deposits		201,450		128		0.26			188,255		258		0.56
Time deposits		127,198		560		1.77			118,961		454		1.55
Borrowed funds		43,582		70		0.65			45,403		132		1.18
Total interest-bearing liabilities		533,162		901		0.68	%		471,463		957		0.82	%
Noninterest-bearing demand deposits		188,510							177,779
Other liabilities		3,647							2,901
Shareholders' Equity		87,090							78,038
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	812,409						$	730,181
Taxable equivalent net interest income			$	6,953						$	7,049
Taxable equivalent net interest spread						3.47	%						3.90	%
Taxable equivalent net interest margin						3.67	%						4.16	%

¹ Average balances have been computed on an average daily basis.

² Average rates have been computed based on the amortized cost of the corresponding asset or liability.

³ Average loan balances include nonaccrual loans.

⁴ Interest income is shown on a fully tax-equivalent basis.

Interest income for the quarter ended ~~June 30, 2019,~~March 31, 2020, was ~~$8.1~~$7.8 million representing a ~~$777~~$151 thousand ~~increase,~~decrease, or ~~an 11% improvement,~~ a 2% decline, compared to the same period in ~~2018.~~2019. This ~~increase~~decrease was primarily due to average loan rates ~~increasing 37~~decreasing 29 basis points ~~as well as~~partially offset by a volume increase of ~~$13~~$10 million for the quarter ended ~~June 30, 2019~~March 31, 2020 as compared to the ~~second~~first quarter ~~2018.~~2019. Interest expense for the quarter ended ~~June 30, 2019~~March 31, 2020 was ~~$1.1 million, an increase~~$901 thousand, a decrease of ~~$358~~$56 thousand, or ~~52%~~6%, from the same period in ~~2018.~~2019. The ~~increase~~decrease in interest expense occurred primarily due to ~~an increase~~a decrease in ~~rate~~rates on all ~~interest-bearing~~deposit liabilities except time deposits for the quarter ended ~~June 30, 2019.~~March 31, 2020.

For the quarter ended ~~June 30, 2019, the~~March 31, 2020, the provision for loan losses was ~~$285~~ $178 thousand, compared to a provision of ~~$324~~$285 thousand provision for the same quarter in ~~2018.~~2019. At December 31, 2019 the allowance had an unallocated reserve portion that was allocated during first quarter 2020 including a qualitative factor for the developing Covid-19 pandemic. For more discussion see Financial Condition. 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~~charge-ffs and current economic trends.

Noninterest income for the quarter ended June 30, 2019, was $1.3 million, an increase of $145 thousand, or 12%, compared to the same quarter in 2018. Service charges on deposit accounts increased $13 thousand, or 4%, compared to the same quarter in 2018 primarily from a volume increase in overdraft fees. The gain on the sale of mortgage loans to the secondary market increased to $76 thousand for the quarter ended June 30, 2019 as additional loan volume was sold into the secondary market. Debit card interchange income increased $46 thousand, or 14%, with greater fees generated from usage in the second quarter of 2019. Fees from trust and brokerage services decreased $5 thousand to $212 thousand for the second quarter 2019 as compared to the same quarter in 2018. Earnings on bank owned life insurance increased $37 thousand for the second quarter 2019, see discussion in Results of Operations for the six months periods.26

Noninterest expenses for the quarter ended June 30, 2019 increased $281 thousand, or 6%, compared to the second quarter of 2018. Salaries and employee benefits increased $197 thousand, or 7%, a result of increases in employees, base salary, and other benefits. Marketing and public relations expense increased

CSB BANCORP, INC.

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

~~$20~~Noninterest income for the quarter ended March 31, 2020, was $1.3 million, an increase of $119 thousand, or 10%, compared to the same quarter in 2019. Earnings on bank owned life insurance increased $46 thousand for the first quarter 2020 a result of adding policies in 2019. The gain on the sale of mortgage loans to the secondary market increased by $35 thousand for the quarter ended March 31, 2020 as additional loan volume was sold into the secondary market.Debit card interchange income increased $28 thousand, or 8%, with greater fees generated from usage in the first quarter of 2020. Fees from trust and brokerage services increased $6 thousand to $230 thousand for the first quarter 2020 as compared to the same quarter in 2019. Service charges on deposit accounts decreased $1 thousand, or ~~17%~~less than 1%, compared to the same quarter in 2019 primarily from a volume decrease in overdraft fees.

Noninterest expenses for the quarter ended March 31, 2020 increased $216 thousand, or 5%, compared to the first quarter of 2019. Salaries and employee benefits increased $126 thousand, or 4%, a result of increases in employees, base salary, and other benefits. The Ohio financial institutions tax increased $18 thousand in the first quarter due to the Company’s increased capital base. Marketing and public relations expense increased $10 thousand, or 9%, primarily due to brand recognition initiatives and the opening of a new banking center. Debit card expenses increased $6$13 thousand, or 5%10%, compared to the ~~second~~ first quarter ~~2018~~ 2019 with increased volume. Software expense rose ~~$11~~$9 thousand quarter over quarter with additional investment. Occupancy expense ~~decreased $9~~increased $16 thousand in ~~2019~~2020 over the ~~second~~first quarter of ~~2018.~~2019. Professional and director fees ~~increased $69~~decreased $9 thousand for the quarter ended ~~June 30, 2019~~March 31, 2020 as compared to the ~~second~~first quarter ~~2018. The increase was primarily a result of increased service costs related to network improvements.~~2019.

Federal income tax expense ~~increased $60~~decreased $28 thousand, or ~~11%~~5%, for the quarter ended ~~June 30, 2019~~ March 31, 2020 as compared to the ~~second~~first quarter of ~~2018.~~2019. The provision for income taxes was ~~$613~~$591 thousand (effective rate of 19%) for the quarter ended ~~June 30, 2019,~~March 31, 2020, compared to ~~$553~~$619 thousand (effective rate of 19%) for the same quarter ended ~~2018.~~2019.

~~RESULTS OF OPERATIONS~~

~~Six months ended June 30, 2019 and 2018~~

For the six months ended June 30, 2019 and 2018, the Company recorded net income of $5.1 million and $4.5 million and $1.87 and $1.64 per share, respectively. The $638 thousand increase in net income for the quarter was primarily the result of a $1 million increase in net interest income, an increase of $224 thousand in other noninterest income, and a decrease in the provision for loan losses of $78 thousand. The increases were partially offset by an increase of $535 thousand in other noninterest expenses and an increase in the federal income tax provision of $170 thousand.

~~Return on average assets and return on average equity were 1.40% and 13.05%, respectively, for the six month period of 2019, compared to 1.28% and 12.64%, respectively for the same quarter in 2018.~~

~~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 six months ended June 30,
   2019 2018
(Dollars in thousands)
   Average
balance    Average
rate Average
balance    Average
rate
ASSETS

Federal funds sold
   $ 305    2.38 % $ 508    1.98 %
Interest-earning deposits in other banks
   33,144    2.37 14,294    1.75
Taxable securities
   87,502    2.70 94,449    2.56
Tax-exempt securities
   23,228    2.95 27,419    2.90
Loans
   549,225    5.24 531,107    4.81





Total earning assets
   693,404    4.70 % 667,777    4.34 %
Other assets
   44,598    40,421





TOTAL ASSETS
   $ 738,002    $ 708,198





LIABILITIES AND SHAREHOLDERS’ EQUITY

Interest-bearing demand deposits
   $ 123,050    0.42 % $ 117,475    0.26 %
Savings deposits
   187,211    0.55 180,413    0.30
Time deposits
   121,495    1.62 114,617    1.05
Other borrowed funds
   45,101    1.17 52,708    0.91





Total interest bearing liabilities
   476,857    0.85 % 465,213    0.54 %
Non-interest bearing demand deposits
   178,980    169,071
Other liabilities
   2,971    2,306
Shareholders’ Equity
   79,194    71,608





TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
   $ 738,002    $ 708,198





Taxable equivalent net interest spread
      3.85 %    3.80 %
Taxable equivalent net interest margin
      4.12 %    3.97 %

Interest income for the six months ended June 30, 2019, was $16 million representing a $1.8 million increase, or a 13% improvement, compared to the same period in 2018. This increase was primarily due to the increase in average loan rates, as well as loan volume increasing $18 million for the period ended June 30, 2019 as compared to the same period in 2018. Interest expense for the six months ended June 30, 2019 was $2.0 million, an increase of $755 thousand, or 60%, from the same period in 2018. The increase in interest expense occurred primarily due to an increase in rate on all interest-bearing liabilities for the six month period ended June 30, 2019.

For the six month period ended June 30, 2019, the provision for loan losses was $570 thousand, compared to a provision of $648 thousand provision for the same period in 2018. For more discussion see Financial Condition. 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 six month period ended June 30, 2019, was $2.5 million, an increase of $224 thousand, or 10%, compared to the same period in 2018. Service charges on deposit accounts increased $21 thousand, or 4%, compared to the same period in 2018 primarily from increases in overdraft fees. Debit card interchange income increased $80 thousand, or 13%, with increased card usage in the first six months of 2019. The cash surrender value of bank owned life insurance policies increased $39 thousand for the period with the additional purchase of $3 million in policies in 2019.The gain on the sale of mortgage loans to the secondary market increased $18 thousand to $155 thousand for the six month period ended June 30, 2019. Fees from trust and brokerage services were flat for the period.

~~CSB BANCORP, INC.~~

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

Noninterest expenses for the six month period ended June 30, 2019 increased $535 thousand, or 6%, compared to the same period in 2018. Salaries and employee benefits increased $402 thousand, or 8%, a result of increases in employees, base salary, and other benefits. Marketing and public relations expense increased $17 thousand, or 7%, with increases in market, brand recognition initiatives, and community support in the company’s market. Debit card expenses increased $17 thousand, or 7%, compared to the prior period in 2018. Occupancy expense declined $25 thousand over the same period in 2018 with a decrease in depreciation and rental expense. Professional and director fees increased $96 thousand for the six month period ended June 30, 2019 as compared to the same period in 2018 with increases in service fees to improve the network.

Federal income tax expense increased $170 thousand, or 16%, for the six months ended June 30, 2019 as compared to the same period in 2018. The provision for income taxes was $1.2 million (effective rate of 19%) for the six month period ended June 30, 2019, compared to $1.1 million (effective rate of 19%) for the same period ended 2018.

~~CAPITAL~~CAPITAL RESOURCES

The Company maintained a strong capital position with tangible common equity to tangible assets of 10.3% at ~~June 30, 2019~~March 31, 2020 compared with 9.9% at December 31, ~~2018.~~

Effective January 1, 2015 the Federal Reserve adopted final rules implementing Basel III and regulatory capital changes required by the Dodd-Frank Act. The rules apply to both the Company and the Bank. The rules established minimum risk-based and leverage capital requirements for all banking organizations. Effective with the March 31, 2015 Call Report the Bank selected the~~opt-out~~ ~~election for accumulated other comprehensive income (“AOCI”). This election neutralizes the effects of unrealized gains and losses fromavailable-for-sale~~ ~~securities and other elements of the AOCI account for regulatory capital purposes.~~2019.

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 Form10-K for the year ended December 31, ~~2018.~~2019. As of ~~June 30, 2019~~ March 31, 2020 the Company and the Bank met all capital adequacy requirements to which they were subject.

CSB BANCORP, INC.

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

   Capital Ratios
   June 30, 2019 December 31, 2018
Common Equity Tier 1 Capital To Risk Weighted Assets

Consolidated
   14.0 % 13.4 %
Bank
   13.8 % 13.2 %
Tier 1 Capital To Risk Weighted Assets Ratio

Consolidated
   14.0 % 13.4 %
Bank
   13.8 % 13.2 %
Total Capital To Risk Weighted Assets Ratio

Consolidated
   15.2 % 14.5 %
Bank
   15.0 % 14.3 %
Tier 1 Leverage Ratio

Consolidated
   10.4 % 10.1 %
Bank
   10.2 % 9.9 %

During October 2019, the federal banking agencies adopted an optional community bank leverage ratio (“CBLR”). Depository institutions and depository institution holding companies, that have less than $10 billion in total consolidated assets and have a tier 1 leverage ratio of greater than 9 percent, are considered qualifying community banking organizations and are eligible to opt into the community bank leverage ratio framework. Additionally, such insured depository institutions are considered to have satisfied the risk-based and leverage capital requirements and will be considered well-capitalized under the rule, effective January 1, 2020. The Company met the well-capitalized ratios under the new standard at both March 31, 2020 and December 31, 2019, but has not elected to opt-in to the CBLR framework as of March 31, 2020.

	Capital Ratios
	March 31, 2020		December 31, 2019
Common Equity Tier 1 Capital To Risk Weighted Assets
Consolidated		14.5		14.3
Bank		14.3		14.1

Tier 1 Capital To Risk Weighted Assets Ratio
Consolidated		14.5		14.3
Bank		14.3		14.1

Total Capital To Risk Weighted Assets Ratio
Consolidated		15.7		15.5
Bank		15.5		15.3

Tier 1 Leverage Ratio
Consolidated		10.2		10.0
Bank		10.1		9.9

LIQUIDITY


(Dollars in millions)	June 30, 2019			December 31, 2018			Change		March 31, 2020		December 31, 2019		Change
Cash and cash equivalents	$	57		$	46		$	11	$	96	$	102	$	(6	)
Unused lines of credit		97			89			8
Available from FHLB										100		97		3
Unpledged AFS securities at fair market value		41			39			2		46		61		(15	)
									$	242	$	260	$	(18	)
	$	195		$	174		$	21

Net deposits and short-term liabilities	$	614		$	599		$	15	$	652	$	673	$	(21	)

Liquidity ratio		31.8	%		29.1	%		2.7		37.2		38.6
Minimum board approved liquidity ratio		20.0	%		20.0	%		—		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 ~~31.8%~~37.2% and ~~29.1%~~ 38.6% at ~~June 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

~~OFF-BALANCE~~ ~~SHEET ARRANGEMENTS~~Off-Balance Sheet Arrangements

The Company does not have anyoff-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.

CSB BANCORP, INC.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 3 ~~–QUANTITATIVE~~- QUANTITATIVE AND ~~QUALITATIVE~~QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~There have been no material changes in the quantitative and qualitative disclosures about~~

COVID-19 added market ~~risks as of June 30, 2019, from~~ risk disclosure which should be read with the disclosures presented in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, ~~2018.~~2019. While 2020 began with increased loan demand and strong employment, the economic picture reversed sharply as coronavirus wreaked havoc and became the lead story by mid-March. A series of emergency health orders for public safety curtailed nonessential activity and had the effect of shutting down vast swaths of Ohio’s economy, resulting in more than 8% of Ohio’s active workforce filing for unemployment during the last two weeks of March alone. We anticipate that second quarter will be very difficult for many small businesses, organizations and households, and are focused on working to address the financial needs within our primary market areas during this extraordinarily challenging health crisis. This pandemic may affect the Company’s employee base which has been dispersed amongst different buildings and home to ensure no one department could be disrupted by illness. The lack of economic activity, layoffs, and illness among businesses may have a material adverse effect on the Company’s business.

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

The following table presents an analysis of the estimated sensitivity of the Company’s annual net interest income to sudden and sustained-200 through +400 basis point changes, in 100 basis point increments, in market interest rates at ~~June 30, 2019~~March 31, 2020 and~~-200~~ ~~through +400 basis point changes at~~ December 31, ~~2018.~~2019. The net interest income reflected is for the first ~~twelve month~~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.


June 30, 2019
March 31, 2020													March 31, 2020
(Dollars in thousands)	(Dollars in thousands)												(Dollars in thousands)
Change in Interest Rates (basis points)		Net Interest Income		Dollar Change			Percentage Change			Board Policy Limits				Net Interest Income		Dollar Change			Percentage Change			Board Policy Limits
+400		$	29,780	$	893			3.1	%		+/-25	%		$	26,615	$	(675	)		(2.5	)	+/- 25		%
+300			29,597		710			2.5			+/-15				26,980		(310	)		(1.1	)	+/-15
+200			29,388		501			1.7			+/-10				26,969		(321	)		(1.2	)	+/-10
+100			29,118		231			0.8			+/-5				27,087		(203	)		(0.7	)	+/-5
0			28,887		—			—			—				27,290		—			—			—
-100			28,557		(330	)		(1.1	)		+/-5				27,177		(113	)		(0.4	)	+/-5
-200			27,950		(937	)		(3.3	)		+/-10				26,800		(490	)		(1.8	)	+/-10

December 31, 2018
December 31, 2019													December 31, 2019
+400		$	30,114	$	931			3.2	%		+/-25	%		$	30,266	$	1,481			5.1		+/- 25		%
+300			29,922		739			2.5			+/-15				29,958		1,173			4.2		+/-15
+200			29,701		518			1.8			+/-10				29,599		814			3.0		+/-10
+100			29,436		253			0.9			+/-5				29,208		423			1.5		+/-5
0			29,183		—			—			—				28,785		—			—			—
-100			28,831		(352	)		(1.2	)		+/-5				27,955		(830	)		(2.9	)	+/-5
-200			27,880		(1,303	)		(4.5	)		+/-10				26,767		(2,018	)		(7.0	)	+/-10

CSB BANCORP, INC.

CONTROLS AND PROCEDURES

ITEM ~~4—CONTROLS~~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 Rule13a-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 Form10-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 Form10-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 Form10-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 Form10-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 Form10-Q, are being prepared.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes during the period covered by this Quarterly Report on Form10-Q in the Company’s internal control over financial reporting (as defined in Rule13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

CSB BANCORP, INC.

FORM10-Q

Quarter ended ~~June 30, 2019~~March 31, 2020

PART II – OTHER INFORMATION


~~ITEM 1-~~		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 Form10-K~~ ~~for the fiscal year ended December 31, 2018.~~

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

		~~On July 7, 2005 CSB Bancorp, Inc. filed Form8-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 June 30, 2019.

~~ITEM 3-~~		~~DEFAULTS UPON SENIOR SECURITIES.~~

		~~Not applicable.~~

~~ITEM 4-~~		~~MINE SAFETY DISCLOSURES.~~

		~~Not applicable.~~

~~ITEM 5-~~		~~OTHER INFORMATION.~~

		~~Not applicable.~~

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, 2019, other than the COVID-19 developments previously discussed under Item 3 - Quantitative and Qualitative Disclosures About Market Risk in Part I of this report.

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 March 31, 2020.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4 - MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5 - OTHER INFORMATION.

Not applicable.

CSB BANCORP, INC.

FORM 10-Q

Quarter ended ~~June 30, 2019~~March 31, 2020

PART II – OTHER INFORMATION

ITEM 6 - Exhibits.


~~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 Form10-Q filed August 6, 2004, Exhibit 3.1, film number ~~04958544)~~000-21714).
3.1.1		Amended form of Article Fourth of Amended Articles of Incorporation, as effective April 9, 1998 (incorporated by reference to registrant’s Annual Report on Form 10-K filed on March 30, 1999, Exhibit 3.1.1, file number 000-21714).
3.2		Code of Regulations of CSB Bancorp, Inc. (incorporated by reference to the Registrant’s Form10-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~~ Description of Capital Stock (incorporated by reference to ~~Registrant’s~~registrants Annual Report on Form~~10-SB)~~ 10-K filed on March 16, 2020, Exhibit 4.0, file number 000-21714). ~~(P).~~

11		Statement Regarding Computation of Per Share Earnings.

31.1		Rule13a-14(a)/15d-14(a) Chief Executive Officer’s Certification.

31.2		Rule13a-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 Form10-Q for the quarter ended ~~June 30, 2019~~March 31, 2020 formatted in XBRL (extensible Business Reporting Language): (i) Consolidated Balance Sheets: (ii) Consolidated Statements of Income: (iii) Consolidated Statements of Comprehensive Income: (iv) Consolidated Statements of Changes in Shareholders’ Equity: (v) Condensed Consolidated Statements of Cash Flows: and (vi) Notes to Consolidated Financial Statements.

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: ~~August~~	May 8, ~~2019~~		2020	/s/ Eddie L. Steiner
		Eddie L. Steiner
		President
		Chief Executive Officer


Date: ~~August~~	May 8, ~~2019~~		2020	/s/ Paula J. Meiler
		Paula J. Meiler
		Senior Vice President
		Chief Financial Officer

3833

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock		CSBB		OTCPink


Common stock, $6.25 par value		Outstanding at ~~August~~May 1, ~~2019,~~ 2020, 2,742,350 common shares

~~Large accelerated filer~~

~~Accelerated filer~~

~~Non-accelerated filer~~

Large accelerated filer ( ) Accelerated filer (X) Non-accelerated filer ( ) Smaller reporting ~~company~~