CSB Bancorp (CSBB) 10-Q 2024 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: June 30, 2024

OR

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

Commission File Number: 000-21714

CSB Bancorp, Inc.

(Exact Name of Registrant as Specified in its Charter)

Ohio	34-1687530
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
91 North Clay Street, P.O. Box 232 Millersburg, OH	44654
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (330) 674-9015

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, $6.25 par value	CSBB	OTCPink

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

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

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of August 1, 2024, the registrant had 2,662,459 shares of common stock, $6.25 par value per share, outstanding.

CSB BANCORP, INC.

FORM 10-Q

QUARTER ENDED June 30, 2024

Table of Contents

	Part I - Financial Information
		Page
ITEM 1 –	FINANCIAL STATEMENTS (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Shareholders' Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
ITEM 2 –	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
ITEM 3 –	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	38
ITEM 4 –	CONTROLS AND PROCEDURES	39
	Part II - Other Information
ITEM 1 –	Legal Proceedings	40
ITEM 1A –	Risk Factors	40
ITEM 2 –	Unregistered Sales of Equity Securities and Use of Proceeds	40
ITEM 3 –	Defaults upon Senior Securities	40
ITEM 4 –	Mine Safety Disclosures	40
ITEM 5 –	Other Information	40
ITEM 6 –	Exhibits	41
	Signatures	42

2

CSB BANCORP, INC.

PART I – FINANCIAL INFORMATION

ITEM 1. – FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30,			December 31,
(Dollars in thousands, except per share data)	2024			2023
ASSETS
Cash and cash equivalents
Cash and due from banks	$	19,873		$	24,463
Interest-earning deposits with banks		35,941			39,614
Federal funds sold		391			—
Total cash and cash equivalents		56,205			64,077
Securities
Available-for-sale, at fair value		127,279			140,080
Held-to-maturity fair value of $183,484 in 2024 and $194,730 in 2023 ($0 credit loss allowance)		216,899			226,279
Equity securities		230			259
Restricted stock, at cost		1,520			1,535
Total securities		345,928			368,153
Loans held for sale		228			—
Loans		721,916			701,404
Less allowance for credit losses		10,587			6,607
Net loans		711,329			694,797
Premises and equipment, net		13,538			13,002
Bank-owned life insurance		25,793			25,410
Goodwill		4,728			4,728
Accrued interest receivable and other assets		9,566			8,522
TOTAL ASSETS	$	1,167,315		$	1,178,689
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest-bearing	$	277,749		$	301,697
Interest-bearing		746,086			725,730
Total deposits		1,023,835			1,027,427
Short-term borrowings		27,842			35,843
Other borrowings		1,326			1,754
Allowance for credit losses on off-balance sheet commitments		477			736
Accrued interest payable and other liabilities		3,467			4,990
TOTAL LIABILITIES		1,056,947			1,070,750
SHAREHOLDERS' EQUITY
Common stock, $6.25 par value. Authorized 9,000,000 shares; issued    2,980,602 shares; outstanding 2,663,924 shares in 2024 and 2,669,938 in 2023		18,629			18,629
Additional paid-in capital		9,815			9,815
Retained earnings		99,766			97,297
Treasury stock at cost: 316,678 shares in 2024 and 310,664 shares in 2023		(7,757	)		(7,532	)
Accumulated other comprehensive loss		(10,085	)		(10,270	)
TOTAL SHAREHOLDERS' EQUITY		110,368			107,939
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,167,315		$	1,178,689

See notes to unaudited consolidated financial statements.

3

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands, except per share data)	2024			2023			2024			2023
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	10,219		$	8,711		$	20,428		$	16,680
Taxable securities		1,817			1,945			3,707			3,957
Nontaxable securities		88			102			176			203
Other		379			444			748			989
Total interest and dividend income		12,503			11,202			25,059			21,829
INTEREST EXPENSE
Deposits		3,489			2,128			6,789			3,712
Short-term borrowings		81			70			181			136
Other borrowings		8			10			16			22
Total interest expense		3,578			2,208			6,986			3,870
NET INTEREST INCOME		8,925			8,994			18,073			17,959
CREDIT LOSS EXPENSE
Provision for credit loss expense - loans		3,697			242			4,300			274
Recovery for credit loss expense - off-balance sheet commitments		(808	)		(102	)		(259	)		(165	)
Total provision for credit loss expense		2,889			140			4,041			109
NET INTEREST INCOME AFTER CREDIT LOSS EXPENSE		6,036			8,854			14,032			17,850
NONINTEREST INCOME
Service charges on deposit accounts		291			300			571			592
Trust services		283			252			677			510
Debit card interchange fees		528			533			1,035			1,054
Credit card fees		165			192			322			369
Gain on sale of loans, net		73			56			109			59
Earnings on bank owned life insurance		194			172			382			341
Unrealized (loss) gain on equity securities, net		(23	)		4			(29	)		13
Other income		230			224			446			423
Total noninterest income		1,741			1,733			3,513			3,361
NONINTEREST EXPENSES
Salaries and employee benefits		3,056			3,389			6,525			6,683
Occupancy expense		294			284			577			566
Equipment expense		201			189			425			396
Professional and director fees		437			386			769			707
Financial institutions tax		216			192			432			384
Marketing and public relations		142			136			270			259
Software expense		414			421			842			820
Debit card expense		193			169			382			315
FDIC insurance expense		129			178			264			249
Other expenses		732			705			1,470			1,389
Total noninterest expenses		5,814			6,049			11,956			11,768
Income before income taxes		1,963			4,538			5,589			9,443
FEDERAL INCOME TAX PROVISION		348			894			1,041			1,865
NET INCOME	$	1,615		$	3,644		$	4,548		$	7,578
Basic and diluted net earnings per share	$	0.61		$	1.36		$	1.71		$	2.82

See notes to unaudited consolidated financial statements

4

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2024			2023			2024			2023
Net income	$	1,615		$	3,644		$	4,548		$	7,578
Other comprehensive income (loss)
Unrealized gain (loss) arising during the period		291			(1,923	)		147			(596	)
Amortization of discount on securities transferred to held-to-maturity		46			48			87			94
Income tax effect		(71	)		394			(49	)		105
Other comprehensive income (loss)		266			(1,481	)		185			(397	)
Total comprehensive income	$	1,881		$	2,163		$	4,733		$	7,181

See notes to unaudited consolidated financial statements.

5

CSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except per share data)	Common stock		Additional paid-in capital		Retained earnings			Treasury stock			Accumulated other comprehensive loss			Total
Three Months Ended June 30, 2024
Balance at beginning of period	$	18,629	$	9,815	$	99,191		$	(7,729	)	$	(10,351	)	$	109,555
Net income		—		—		1,615			—			—			1,615
Other comprehensive income		—		—		—			—			266			266
Purchase of 759 treasury shares		—		—		—			(28	)		—			(28	)
Cash dividends declared, $0.39 per share		—		—		(1,040	)		—			—			(1,040	)
Balance at June 30, 2024	$	18,629	$	9,815	$	99,766		$	(7,757	)	$	(10,085	)	$	110,368
Six Months Ended June 30, 2024
Balance at December 31, 2023	$	18,629	$	9,815	$	97,297		$	(7,532	)	$	(10,270	)	$	107,939
Net income		—		—		4,548			—			—			4,548
Other comprehensive income		—		—		—			—			185			185
Purchase of 6,014 treasury shares		—		—		—			(225	)		—			(225	)
Cash dividends declared, $0.78 per share		—		—		(2,079	)		—			—			(2,079	)
Balance at June 30, 2024	$	18,629	$	9,815	$	99,766		$	(7,757	)	$	(10,085	)	$	110,368
Three Months Ended June 30, 2023
Balance at beginning of period	$	18,629	$	9,815	$	89,524		$	(7,126	)	$	(11,835	)	$	99,007
Net income		—		—		3,644			—			—			3,644
Other comprehensive loss		—		—		—			—			(1,481	)		(1,481	)
Purchase of 300 treasury shares		—		—		—			(11	)		—			(11	)
Cash dividends declared, $0.38 per share		—		—		(1,019	)		—			—			(1,019	)
Balance at June 30, 2023	$	18,629	$	9,815	$	92,149		$	(7,137	)	$	(13,316	)	$	100,140
Six Months Ended June 30, 2023
Balance at December 31, 2022	$	18,629	$	9,815	$	86,502		$	(6,107	)	$	(12,919	)	$	95,920
Net income		—		—		7,578			—			—			7,578
Cumulative effect of adoption of ASU 2016-13		—		—		52			—			—			52
Other comprehensive loss		—		—		—			—			(397	)		(397	)
Purchase of 27,251 treasury shares		—		—		—			(1,030	)		—			(1,030	)
Cash dividends declared, $0.74 per share		—		—		(1,983	)		—			—			(1,983	)
Balance at June 30, 2023	$	18,629	$	9,815	$	92,149		$	(7,137	)	$	(13,316	)	$	100,140

See notes to unaudited consolidated financial statements.

6

CSB BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
(Dollars in thousands)	2024			2023
NET CASH FROM OPERATING ACTIVITIES	$	5,989		$	6,194
CASH FLOWS FROM INVESTING ACTIVITIES
Securities:
Proceeds from repayments, available-for-sale		12,720			4,350
Proceeds from repayments, held-to-maturity		9,318			9,118
Purchases, available-for-sale		—			(492	)
Redemption of FHLB stock		15			1,823
Loan originations, net		(20,560	)		(37,565	)
Property, equipment, and software acquisitions		(1,029	)		(234	)
Net cash provided by (used in) investing activities		464			(23,000	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits		(3,592	)		(1,746	)
Net decrease in short-term borrowings		(8,001	)		(4,030	)
Repayment of other borrowings		(428	)		(599	)
Cash dividends paid		(2,079	)		(1,983	)
Purchase of treasury shares		(225	)		(1,030	)
Net cash used in financing activities		(14,325	)		(9,388	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(7,872	)		(26,194	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		64,077			86,420
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	56,205		$	60,226
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest	$	6,927		$	3,778
Income taxes		1,950			2,650

See notes to unaudited consolidated financial statements.

7

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

The condensed consolidated financial statements have been prepared without audit. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the Company’s financial position at June 30, 2024, and the results of operations and changes in cash flows for the periods presented have been made.

Certain information and footnote disclosures typically included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted. The Annual Report for CSB for the year ended December 31, 2023, contains Consolidated Financial Statements and related footnote disclosures, which should be read in conjunction with the accompanying condensed Consolidated Financial Statements. The results of operations for the period ended June 30, 2024 are not necessarily indicative of the operating results for the full year or any future interim period.

Certain items in the prior-year financial statements were reclassified to conform to the current-year presentation. Such reclassifications had no effect on net income or shareholders’ equity.

USE OF ESTIMATES IN PREPARING FINANCIAL STATEMENTS

In preparing the Consolidated Financial Statements, in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Balance Sheets and reported amounts of revenues and expenses during each reporting period. Actual results could differ from those estimates. The most significant estimates susceptible to change in the near term relate to management’s determination of the allowance for credit losses and the fair value of financial instruments.

RECENTLY ISSUED ACCOUNTING PRONOUNCMENTS

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic740): Improvements to Income Tax Disclosure. This new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This Update also includes certain other amendments to improve the effectiveness of income tax disclosures. It is effective for public business entities for annual periods beginning after December 15, 2024. This update is not expected to have a significant impact on the Company's financial statements.

8

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES

Securities consist of the following on June 30, 2024 and December 31, 2023:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses		Fair Value
June 30, 2024
Available-for-sale
U.S. Treasury securities	$	11,065	$	—	$	(253	)	$	—	$	10,812
U.S. Government agencies		13,999		—		(655	)		—		13,344
Mortgage-backed securities of government agencies		66,544		14		(7,731	)		—		58,827
Asset-backed securities of government agencies		473		—		(4	)		—		469
State and political subdivisions		17,429		—		(1,017	)		—		16,412
Corporate bonds		29,090		4		(1,679	)		—		27,415
Total available-for-sale		138,600		18		(11,339	)		—		127,279
Held-to-maturity
U.S. Treasury securities	$	10,329	$	—	$	(784	)		—	$	9,545
Mortgage-backed securities of government agencies		204,036		—		(32,372	)		—		171,664
State and political subdivisions		2,534		—		(259	)		—		2,275
Total held-to-maturity		216,899		—		(33,415	)		—		183,484
Equity securities		185		45		—			—		230
Restricted stock		1,520		—		—			—		1,520
Total securities	$	357,204	$	63	$	(44,754	)	$	—	$	312,513
December 31, 2023
Available-for-sale
U.S. Treasury securities	$	18,110	$	—	$	(421	)	$	—	$	17,689
U.S. Government agencies		14,000		—		(848	)		—		13,152
Mortgage-backed securities of government agencies		72,279		98		(7,332	)		—		65,045
Asset-backed securities of government agencies		548		—		(25	)		—		523
State and political subdivisions		17,476		—		(890	)		—		16,586
Corporate bonds		29,135		6		(2,056	)		—		27,085
Total available-for-sale		151,548		104		(11,572	)		—		140,080
Held-to-maturity
U.S. Treasury securities		10,305		—		(798	)		—		9,507
Mortgage-backed securities of government agencies		213,425		—		(30,534	)		—		182,891
State and political subdivisions		2,549		2		(219	)		—		2,332
Total held-to-maturity		226,279		2		(31,551	)		—		194,730
Equity securities		185		74		—			—		259
Restricted stock		1,535		—		—			—		1,535
Total securities	$	379,547	$	180	$	(43,123	)	$	—	$	336,604

9

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES (continued)

The amortized cost and fair value of debt securities on June 30, 2024, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollars in thousands)	Amortized cost		Fair value
Available-for-sale
Due in one year or less	$	25,351	$	24,823
Due after one through five years		32,105		30,382
Due after five through ten years		18,386		16,737
Due after ten years		62,758		55,337
Total debt securities available-for-sale	$	138,600	$	127,279
Held-to-maturity
Due in one year or less	$	2,499	$	2,466
Due after one through five years		5,176		4,842
Due after five through ten years		4,879		4,251
Due after ten years		204,345		171,925
Total debt securities held-to-maturity	$	216,899	$	183,484

Securities with a fair value of approximately $147 million and $126 million were pledged on June 30, 2024 and December 31, 2023, respectively, to secure public deposits, as well as other deposits and borrowings as required or permitted by law.

Restricted stock primarily consists of investments in Federal Home Loan Bank of Cincinnati (FHLB) and Federal Reserve Bank stock. The Bank’s investment in FHLB stock amounted to approximately $1.0 million on June 30, 2024 and December 31, 2023. The FHLB redeemed approximately $15 thousand in stock at $100 par value per share during the six-month period ended June 30, 2024. Federal Reserve Bank stock was $471 thousand on June 30, 2024 and December 31, 2023.

There were no proceeds from sales of securities for the three and six-month period ended June 30, 2024 and 2023. All gains and losses recognized on equity securities during the three and six-month periods were unrealized.

10

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES (continued)

The following table presents gross unrealized losses and fair value of securities available-for-sale, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, on June 30, 2024 and December 31, 2023:

	Securities in a continuous unrealized loss position
	Less than 12 months					12 months or more					Total
(Dollars in thousands)	Gross unrealized losses			Fair value		Gross unrealized losses			Fair value		Gross unrealized losses			Fair value
June 30, 2024
Available-for-sale
U.S. Treasury securities	$	—		$	—	$	(253	)	$	10,812	$	(253	)	$	10,812
U.S. Government agencies		—			—		(655	)		13,344		(655	)		13,344
Mortgage-backed securities of government agencies		(70	)		5,475		(7,661	)		49,762		(7,731	)		55,237
Asset-backed securities of government agencies		—			—		(4	)		469		(4	)		469
State and political subdivisions		(2	)		423		(1,015	)		15,874		(1,017	)		16,297
Corporate bonds		—			—		(1,679	)		26,915		(1,679	)		26,915
Total temporarily impaired available-for-sale securities	$	(72	)	$	5,898	$	(11,267	)	$	117,176	$	(11,339	)	$	123,074
December 31, 2023
Available-for-sale
U.S. Treasury securities	$	—		$	—	$	(421	)	$	17,689	$	(421	)	$	17,689
U.S. Government agencies		—			—		(848	)		13,152		(848	)		13,152
Mortgage-backed securities of government agencies		(3	)		1,909		(7,329	)		52,144		(7,332	)		54,053
Asset-backed securities of government agencies		—			—		(25	)		523		(25	)		523
State and political subdivisions		(28	)		1,783		(862	)		14,263		(890	)		16,046
Corporate bonds		—			—		(2,056	)		26,586		(2,056	)		26,586
Total temporarily impaired available-for-sale securities	$	(31	)	$	3,692	$	(11,541	)	$	124,357	$	(11,572	)	$	128,049

11

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 2 – SECURITIES (continued)

There were 121 securities in an unrealized loss position on June 30, 2024, 117 of which were in a continuous loss position for twelve (12) months or more. Each quarter the Company conducts a comprehensive security-level impairment assessment on the securities portfolio. Management believes the Company will fully recover the cost of these securities. Unrealized losses on the Company’s fixed-rate debt securities are a result of interest rate increases. U.S. Treasury securities and investments in securities of U.S. government sponsored agency bonds comprise $83 million of total AFS securities. The remaining $44 million of non-agency debt securities is made up of Corporate Bonds and debt securities to State and Political Subdivisions. For non-agency debt securities, the Company verified the current credit ratings remain above investment grade. Non-rated debt securities total $10.5 million. Annually, management reviews the credit profile of each non-rated issue and assesses whether any impairment to the contractually obligated cash flow is likely to occur. Based on these reviews, management has concluded the underlying creditworthiness for each security remains sufficient to maintain required payment obligations and, therefore, no allowance for credit losses has been recorded. Management believes the value will recover as the securities approach maturity or market interest rates change.

The Bank monitors the credit quality of held-to-maturity debt securities primarily through utilizing their credit rating. The Bank monitors the credit rating on a quarterly basis. There are no nonperforming held-to-maturity securities. As of June 30, 2024, no ACL was required for any held-to-maturity security. The majority of the securities are explicitly or implicitly guaranteed by the United States government, and any estimate of expected credit losses would be insignificant to the Bank. The following table summarizes the amortized cost of held-to maturity debt securities at June 30, 2024 and December 31, 2023, aggregated by credit quality indicator:

(Dollars in thousands)	U.S. Treasury securities		Mortgage- backed securities of government agencies		State and political subdivisions
June 30, 2024
Credit rating:
AAA / AA / A	$	10,329	$	204,036	$	2,534
BBB / BB / B		—		—		—
Lower than B		—		—		—
Non-rated		—		—		—
Total	$	10,329	$	204,036	$	2,534
December 31, 2023
Credit rating:
AAA / AA / A	$	10,305	$	213,425	$	2,549
BBB / BB / B		—		—		—
Lower than B		—		—		—
Non-rated		—		—		—
Total	$	10,305	$	213,425	$	2,549

12

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS

The composition of net loans receivable as of June 30, 2024 and December 31, 2023:

(Dollars in thousands)	June 30, 2024			December 31, 2023
Commercial and industrial	$	143,950		$	152,125
Commercial real estate		194,637			190,702
Commercial lessors of buildings		96,235			82,687
Construction		55,275			49,214
Consumer mortgage		171,198			166,891
Home equity line of credit		44,331			43,269
Consumer installment		10,646			10,636
Consumer indirect		5,734			5,957
Total loans		722,006			701,481
Allowance for credit losses		(10,587	)		(6,607	)
Deferred loan fees, net		(90	)		(77	)
Net Loans	$	711,329		$	694,797

Loan Origination/Risk Management

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

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

13

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

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

The top ten collateral exposures in commercial real estate and commercial lessors of buildings at June 30, 2024 are as follows: Industrial, manufacturing and production $57 million; warehouses $38 million; healthcare $27 million; residential investment property $24 million; retail strip centers $17 million; senior housing $17 million; automotive industry $15 million; retail buildings $14 million; lodging $11 million; and office buildings $8 million.

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

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

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

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

Loans serviced for others approximated $136 million and $132 million on June 30, 2024 and December 31, 2023, respectively.

14

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

Concentrations of Credit

Nearly all the Company’s lending activity occurs within the state of Ohio, including the four counties of Holmes, Stark, Tuscarawas and Wayne, as well as other markets. The majority of the Company’s loan portfolio consists of commercial and commercial real estate loans. Credit concentrations, including commitments, as determined using North American Industry Classification Codes (NAICS), to the three largest industries compared to total loans on June 30, 2024, included $75.8 million, or 11%, of total loans to lessors of non-residential buildings, $39.3 million, or 5%, of total loans to manufacturers of animal food, and $30.5 million, or 4%, of total loans to hotels. These loans are generally secured by real property and equipment, with repayment expected from operational cash flow. Credit evaluation is based on a review of cash flow coverage of principal, interest payments, and the adequacy of the collateral received.

Allowance for Credit Losses

The following table details activity in the allowance for credit losses ("ACL") by portfolio segment for the three-months ended June 30, 2024 and 2023. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

For the three and six months ended June 30, 2024, the increase in the provision for commercial and industrial loans and commercial real estate loans primarily relates to one individually evaluated commercial loan relationship which has a collateral shortfall. As of June 30, 2024, this loan relationship has a specific reserve of $4.1 million. The remaining provision amounts for the quarter are primarily a result of changes in loan volume and weighted average remaining maturities of the loans in each category.

For the three and six month periods in 2023 the increase in the provision for commercial and industrial loans primarily related to the increase in loan volume. The change in provision for commercial lessors of buildings related to the increase in loans graded special mention. The decrease in provision for commercial real estate loans was due to the payoff of one larger loan relationship with a specific allocation.

(Dollars in thousands)	Beginning Balance		Charge-offs			Recoveries		Provisions (Recovery)			Ending Balance
Three Months Ended June 30, 2024
Commercial and industrial	$	2,224	$	(257	)	$	12	$	3,295		$	5,274
Commercial real estate		1,612		—			1		420			2,033
Commercial lessors of buildings		1,344		—			—		(16	)		1,328
Construction		323		—			—		3			326
Consumer mortgage		1,068		—			8		(15	)		1,061
Home equity line of credit		284		—			—		(8	)		276
Consumer installment		74		(17	)		4		13			74
Consumer indirect		207		—			3		5			215
	$	7,136	$	(274	)	$	28	$	3,697		$	10,587
Six Months Ended June 30, 2024
Commercial and industrial	$	1,737	$	(268	)	$	19	$	3,786		$	5,274
Commercial real estate		1,637		—			1		395			2,033
Commercial lessors of buildings		1,200		—			—		128			1,328
Construction		333		—			—		(7	)		326
Consumer mortgage		1,107		—			9		(55	)		1,061
Home equity line of credit		288		—			—		(12	)		276
Consumer installment		76		(35	)		7		26			74
Consumer indirect		229		(59	)		6		39			215
	$	6,607	$	(362	)	$	42	$	4,300		$	10,587

15

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

(Dollars in thousands)	Beginning Balance		Impact of Adopting ASC 326			Charge-offs			Recoveries		Provisions (Recovery)			Ending Balance
Three Months Ended June 30, 2023
Commercial and industrial	$	1,821	$	—		$	—		$	9	$	289		$	2,119
Commercial real estate		2,236		—			—			—		(354	)		1,882
Commercial lessors of buildings		965		—			—			—		272			1,237
Construction		271		—			—			—		12			283
Consumer mortgage		693		—			—			1		20			714
Home equity line of credit		186		—			—			—		(8	)		178
Consumer installment		47		—			(15	)		5		15			52
Consumer indirect		88		—			—			10		(4	)		94
Unallocated		—		—			—			—		—			—
	$	6,307	$	—		$	(15	)	$	25	$	242		$	6,559
Six Months Ended June 30, 2023
Commercial and industrial	$	1,110	$	658		$	—		$	19	$	332		$	2,119
Commercial real estate		2,760		(541	)		—			1		(338	)		1,882
Commercial lessors of buildings		—		974			—			—		263			1,237
Construction		803		(515	)		—			—		(5	)		283
Consumer mortgage		1,268		(580	)		—			1		25			714
Home equity line of credit		—		201			—			—		(23	)		178
Consumer installment		233		(183	)		(23	)		5		20			52
Consumer indirect		—		91			(31	)		34		—			94
Unallocated		664		(664	)		—			—		—			—
	$	6,838	$	(559	)	$	(54	)	$	60	$	274		$	6,559

16

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

Age Analysis of Past-Due Loans Receivable and Nonperforming Loans

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

(Dollars in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days + Past Due		Total Past Due		Total Loans
June 30, 2024
Commercial and industrial	$	143,869	$	61	$	20	$	—	$	81	$	143,950
Commercial real estate		194,637		—		—		—		—		194,637
Commercial lessors of buildings		96,235		—		—		—		—		96,235
Construction		55,275		—		—		—		—		55,275
Consumer mortgage		169,824		1,286		88		—		1,374		171,198
Home equity line of credit		44,132		93		72		34		199		44,331
Consumer installment		10,620		17		9		—		26		10,646
Consumer indirect		5,682		52		—		—		52		5,734
Total Loans	$	720,274	$	1,509	$	189	$	34	$	1,732	$	722,006
December 31, 2023
Commercial and industrial	$	151,964	$	111	$	50	$	—	$	161	$	152,125
Commercial real estate		190,702		—		—		—		—		190,702
Commercial lessors of buildings		82,687		—		—		—		—		82,687
Construction		49,214		—		—		—		—		49,214
Consumer mortgage		166,411		307		173		—		480		166,891
Home equity line of credit		42,955		33		281		—		314		43,269
Consumer installment		10,602		25		9		—		34		10,636
Consumer indirect		5,821		52		84		—		136		5,957
Total Loans	$	700,356	$	528	$	597	$	—	$	1,125	$	701,481

17

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing interest as of June 30, 2024 and December 31, 2023:

(Dollars in thousands)	Nonaccrual with no ACL		Nonaccrual with ACL		Total Nonaccrual		Loans Past Due 90 Days or More Still Accruing		Total Nonperforming
June 30, 2024
Commercial and industrial	$	39	$	5,251	$	5,290	$	—	$	5,290
Commercial real estate		—		1,099		1,099		—		1,099
Commercial lessors of buildings		13		—		13		—		13
Construction		—		—		—		—		—
Consumer mortgage		122		—		122		—		122
Home equity line of credit		—		—		—		34		34
Consumer installment		14		—		14		—		14
Consumer indirect		111		—		111		—		111
Total Loans	$	299	$	6,350	$	6,649	$	34	$	6,683
December 31, 2023
Commercial and industrial	$	59	$	—	$	59	$	—	$	59
Commercial real estate		62		—		62		—		62
Commercial lessors of buildings		15		—		15		—		15
Construction		—		—		—		—		—
Consumer mortgage		172		—		172		—		172
Home equity line of credit		—		—		—		—		—
Consumer installment		49		—		49		—		49
Consumer indirect		39		—		39		—		39
Total Loans	$	396	$	—	$	396	$	—	$	396

Interest income recognized on nonaccrual loans for the six months ended June 30, 2024 was $33 thousand.

Collateral-Dependent Financial Assets

When loan repayment is expected to be provided substantially through the operation or sale of collateral and the borrower is experiencing financial difficulty, expected credit losses are based on the fair value of the collateral. The class of loan represents the primary collateral type associated with the loan. There were no collateral dependent loans as of December 31, 2023. The following table presents the amortized cost basis of collateral dependent loans by class of loan:

	Type of Collateral
(Dollars in thousands)	Real Estate		Blanket Liens
June 30, 2024
Commercial and industrial	$	—	$	5,251
Commercial real estate		1,099		—
Total collateral dependent loans	$	1,099	$	5,251

18

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes commercial loans individually by classifying the loans as to credit risk. This analysis includes all commercial loans before origination and an annual review of those with an outstanding commitment greater than $500 thousand. The Company uses the following definitions for risk ratings:

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

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

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

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable and improbable.

19

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass rated loans. Based on the most recent analysis performed, the following tables present the recorded investment in non-homogeneous loans by internal risk rating system as of June 30, 2024 and December 31, 2023:

	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	2024		2023				2022				2021				2020				Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
June 30, 2024
Commercial and industrial:
Pass	$	8,357	$	30,310			$	21,888			$	9,692			$	4,015			$	8,008	$	43,459	$	—	$	125,729
Special mention		63		58				179				156				277				—		2,322		—		3,055
Substandard		—		1,486				3,006				938				328				1,056		8,352		—		15,166
Doubtful		—		—				—				—				—				—		—		—		—
Total	$	8,420	$	31,854			$	25,073			$	10,786			$	4,620			$	9,064	$	54,133	$	—	$	143,950
YTD gross charge-offs	$	—	$	246	$	-	$	—	$	-	$	22	$	-	$	—	$	-	$	—	$	—	$	—	$	268
Commercial real estate:
Pass	$	6,793	$	23,687			$	40,996			$	49,193			$	14,045			$	39,537	$	822	$	—	$	175,073
Special Mention		—		237				1,467				3,041				2,069				510		—		—		7,324
Substandard		348		1,099				—				—				—				10,793		—		—		12,240
Doubtful		—		—				—				—				—				—		—		—		—
Total	$	7,141	$	25,023			$	42,463			$	52,234			$	16,114			$	50,840	$	822	$	—	$	194,637
YTD gross charge-offs	$	—	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	—			$	—
Commercial lessors of buildings:
Pass	$	17,262	$	21,112			$	22,031			$	15,655			$	3,274			$	14,544	$	391	$	—	$	94,269
Special Mention		—		—				—				184				—				—		—		—		184
Substandard		—		—				567				233				969				13		—		—		1,782
Doubtful		—		—				—				—				—				—		—		—		—
Total	$	17,262	$	21,112			$	22,598			$	16,072			$	4,243			$	14,557	$	391	$	—	$	96,235
YTD gross charge-offs	$	—	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	—	$	—	$	—
Commercial Construction:
Pass	$	4,785	$	30,418			$	9,926			$	760			$	851			$	470	$	1,352	$	—	$	48,562
Special Mention		—		—				—												—		—		—		—
Substandard		—		—				—				—				—				76		—		—		76
Doubtful		—		—				—				—				—				—		—		—		—
Total	$	4,785	$	30,418			$	9,926			$	760			$	851			$	546	$	1,352	$	—	$	48,638
YTD gross charge-offs	$	—	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	-	$	—	$	—	$	—	$	—
Total
Pass	$	37,197	$	105,527			$	94,841			$	75,300			$	22,185			$	62,559	$	46,024	$	—	$	443,633
Special Mention		63		295				1,646				3,381				2,346				510		2,322		—		10,563
Substandard		348		2,585				3,573				1,171				1,297				11,938		8,352		—		29,264
Doubtful		—		—				—				—				—				—		—		—		—
Total	$	37,608	$	108,407			$	100,060			$	79,852			$	25,828			$	75,007	$	56,698	$	—	$	483,460
YTD commercial gross charge-offs	$	—	$	246			$	—			$	22			$	—			$	—	$	—	$	—	$	268

20

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
December 31, 2023
Commercial and industrial:
Pass	$	32,037	$	25,996	$	12,196	$	5,207	$	3,388	$	7,112	$	45,423	$	—	$	131,359
Special mention		76		225		522		33		33		65		3,872		—		4,826
Substandard		782		2,968		1,021		1,017		106		1,416		8,630		—		15,940
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	32,895	$	29,189	$	13,739	$	6,257	$	3,527	$	8,593	$	57,925	$	—	$	152,125
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate:
Pass	$	22,206	$	38,696	$	54,830	$	12,233	$	19,543	$	21,938	$	647	$	—	$	170,093
Special Mention		241		1,380		2,292		2,496		—		322		—		—		6,731
Substandard		1,150		—		888		—		466		11,374		—		—		13,878
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	23,597	$	40,076	$	58,010	$	14,729	$	20,009	$	33,634	$	647	$	—	$	190,702
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial lessors of buildings:
Pass	$	18,353	$	22,762	$	15,455	$	6,429	$	3,543	$	8,934	$	360	$	—	$	75,836
Special Mention		—		436		1,687		—		3,578		—		—		—		5,701
Substandard		—		—		—		989		—		161		—		—		1,150
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	18,353	$	23,198	$	17,142	$	7,418	$	7,121	$	9,095	$	360	$	—	$	82,687
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial construction:
Pass	$	24,119	$	14,855	$	576	$	272	$	281	$	256	$	—	$	—	$	40,359
Special Mention		—		258		43		635		—		—		—		—		936
Substandard		—		—		—		30		80		—		—		—		110
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	24,119	$	15,113	$	619	$	937	$	361	$	256	$	—	$	—	$	41,405
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total
Pass	$	96,715	$	102,309	$	83,057	$	24,141	$	26,755	$	38,240	$	46,430	$	—	$	417,647
Special Mention		317		2,299		4,544		3,164		3,611		387		3,872		—		18,194
Substandard		1,932		2,968		1,909		2,036		652		12,951		8,630		—		31,078
Doubtful		—		—		—		—		—		—		—		—		—
Total	$	98,964	$	107,576	$	89,510	$	29,341	$	31,018	$	51,578	$	58,932	$	—	$	466,919
YTD commercial gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

21

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

The Company monitors the credit risk profile by payment activity for the loan classes listed below. Loans past due 90 days or more and loans on nonaccrual status are considered nonperforming. The following table presents the amortized cost in consumer loans based on payment activity as of June 30, 2024 and December 31, 2023:

	Term Loans Amortized Cost Basis by Origination Year
(Dollars in thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
June 30, 2024
Consumer mortgage:
Performing	$	8,086	$	27,855	$	33,551	$	34,420	$	30,606	$	36,558	$	—	$	—	$	171,076
Nonperforming		—		—		—		—		—		122		—		—		122
Total	$	8,086	$	27,855	$	33,551	$	34,420	$	30,606	$	36,680	$	—	$	—	$	171,198
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer Construction:
Performing	$	1,884	$	3,142	$	1,076	$	168	$	324	$	43	$	—	$	—	$	6,637
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	1,884	$	3,142	$	1,076	$	168	$	324	$	43	$	—	$	—	$	6,637
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Home equity line of credit:
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	44,257	$	40	$	44,297
Nonperforming		—		—		—		—		—		—		34		—		34
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	44,291	$	40	$	44,331
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer installment:
Performing	$	2,785	$	4,400	$	2,216	$	623	$	336	$	205	$	67	$	—	$	10,632
Nonperforming		—		7		—		—		—		7		—		—		14
Total	$	2,785	$	4,407	$	2,216	$	623	$	336	$	212	$	67	$	—	$	10,646
YTD gross charge-offs	$	—	$	12	$	15	$	2	$	1	$	5	$	—	$	—	$	35
Consumer indirect:
Performing	$	545	$	715	$	1,011	$	537	$	530	$	2,285	$	—	$	—	$	5,623
Nonperforming		—		22		—		—		—		89		—		—		111
Total	$	545	$	737	$	1,011	$	537	$	530	$	2,374	$	—	$	—	$	5,734
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	59	$	—	$	—	$	59
Total
Performing	$	13,300	$	36,112	$	37,854	$	35,748	$	31,796	$	39,091	$	44,324	$	40	$	238,265
Nonperforming		—		29		—		—		—		218		34		—		281
Total	$	13,300	$	36,141	$	37,854	$	35,748	$	31,796	$	39,309	$	44,358	$	40	$	238,546
YTD consumer gross charge-offs	$	—	$	12	$	15	$	2	$	1	$	64	$	—	$	—	$	94

22

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 3 – LOANS (CONTINUED)

	Term Loans Amortized Cost Basis by Origination Year
	2023		2022		2021		2020		2019		Prior		Revolving Loans Amortized Cost Basis		Revolving Loans Converted to Term		Total
December 31, 2023
Consumer mortgage:
Performing	$	24,521	$	34,798	$	35,802	$	32,259	$	8,931	$	30,408	$	—	$	—	$	166,719
Nonperforming		—		—		—		—		—		172		—		—		172
Total	$	24,521	$	34,798	$	35,802	$	32,259	$	8,931	$	30,580	$	—	$	—	$	166,891
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer construction:
Performing	$	5,463	$	1,477	$	264	$	483	$	81	$	41	$	—	$	—	$	7,809
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	5,463	$	1,477	$	264	$	483	$	81	$	41	$	—	$	—	$	7,809
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Home equity line of credit:
Performing	$	—	$	—	$	—	$	—	$	—	$	—	$	43,223	$	46	$	43,269
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	43,223	$	46	$	43,269
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer installment:
Performing	$	5,705	$	3,067	$	981	$	513	$	118	$	184	$	68	$	—	$	10,636
Nonperforming		—		—		—		—		—		—		—		—		—
Total	$	5,705	$	3,067	$	981	$	513	$	118	$	184	$	68	$	—	$	10,636
YTD gross charge-offs	$	2	$	12	$	19	$	5	$	2	$	6	$	—	$	—	$	46
Consumer indirect:
Performing	$	858	$	1,086	$	622	$	568	$	607	$	2,128	$	—	$	—	$	5,869
Nonperforming		—		3		—		—		81		4		—		—		88
Total	$	858	$	1,089	$	622	$	568	$	688	$	2,132	$	—	$	—	$	5,957
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	66	$	—	$	—	$	66
Total
Performing	$	36,547	$	40,428	$	37,669	$	33,823	$	9,737	$	32,761	$	43,291	$	46	$	234,302
Nonperforming		—		3		—		—		81		176		—		—		260
Total	$	36,547	$	40,431	$	37,669	$	33,823	$	9,818	$	32,937	$	43,291	$	46	$	234,562
YTD consumer gross charge-offs	$	2	$	12	$	19	$	5	$	2	$	72	$	—	$	—	$	112

Consumer mortgages are substantially secured by one to four family owner occupied properties and consumer indirect loans are substantially secured by recreational vehicles. All nonperforming consumer loans are evaluated when placed on nonaccrual status and may be charged down based on the collateral fair value less cost to sell if that value is lower than the outstanding balance. As of June 30, 2024 there were two loans secured by consumer real estate totaling $38 thousand in process of foreclosure.

Modifications to Borrowers Experiencing Financial Difficulty

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

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

There were no modifications of loans to borrowers in financial distress completed during the six months ended June 30, 2024 and 2023.

23

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 4 – SHORT-TERM BORROWINGS

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

	Remaining Contractual Maturity Overnight and Continuous
	June 30,		December 31,
(Dollars in thousands)	2024		2023
Securities of U.S. Government Agencies and mortgage-backed securities of    government agencies pledged, fair value	$	27,995	$	36,002
Repurchase agreements		27,842		35,843

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.

24

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, 2024 and December 31, 2023 by level within the fair value hierarchy. No liabilities are carried at fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Equity securities with readily determinable values and U.S. Treasury Notes are valued at the closing price reported on the active market on which the individual securities are traded. Obligations of U.S. government agencies, mortgage-backed securities, asset-backed securities, obligations of states and political subdivisions and corporate bonds are valued at observable market data for similar assets. Equity securities without readily determinable values are carried at amortized cost adjusted for impairment and observable price changes and are not included in the table below.

(Dollars in thousands)	Level I		Level II		Level III		Total
June 30, 2024
Assets:
Securities available-for-sale
U.S. Treasury securities	$	10,812	$	—	$	—	$	10,812
U.S. Government agencies		—		13,344		—		13,344
Mortgage-backed securities of government agencies		—		58,827		—		58,827
Asset-backed securities of government agencies		—		469		—		469
State and political subdivisions		—		16,412		—		16,412
Corporate bonds		—		27,415		—		27,415
Total available-for-sale securities	$	10,812	$	116,467	$	—	$	127,279
Equity securities	$	184	$	—	$	—	$	184
December 31, 2023
Assets:
Securities available-for-sale
U.S. Treasury securities	$	17,689	$	—	$	—	$	17,689
U.S. Government agencies		—		13,152		—		13,152
Mortgage-backed securities of government agencies		—		65,045		—		65,045
Asset-backed securities of government agencies		—		523		—		523
State and political subdivisions		—		16,586		—		16,586
Corporate bonds		—		27,085		—		27,085
Total available-for-sale securities	$	17,689	$	122,391	$	—	$	140,080
Equity securities	$	213	$	—	$	—	$	213

25

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 5 – FAIR VALUE MEASUREMENTS (CONTINUED)

The following methods and assumptions were used by the Company in determining the fair value of assets measured at fair value on a nonrecurring basis as described below:

Individually evaluated collateral dependent loans: Loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to value the collateral securing these loans include: quoted market prices for identical assets classified as Level I inputs; observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where valuation techniques included unobservable inputs 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.

The following table presents the assets measured on a nonrecurring basis on the consolidated balance sheet at their fair value as of June 30, 2024, by level within the fair value hierarchy.

(Dollars in thousands)	Level I		Level II		Level III		Total
June 30, 2024
Individually evaluated collateral dependent loans recorded at fair value:
Commercial and industrial	$	—	$	—	$	1,577	$	1,577
Commercial real estate		—		—		679		679
Total individually evaluated collateral dependent loans recorded at fair value:	$	—	$	—	$	2,256	$	2,256

NOTE 6 – FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of recognized financial instruments carried at amortized cost as of June 30, 2024 and December 31, 2023 are as follows:

(Dollars in thousands)	Carrying Value		Level I		Level II		Level III		Fair Value
June 30, 2024
Financial assets
Securities held-to-maturity	$	216,899	$	9,545	$	173,939	$	—	$	183,484
Net loans		711,329		—		—		674,962		674,962
Mortgage servicing rights		597		—		—		597		597
Financial liabilities
Deposits	$	1,023,835	$	800,814	$	—	$	224,821	$	1,025,635
Other borrowings		1,326		—		—		1,154		1,154
December 31, 2023
Financial assets
Securities held-to-maturity	$	226,279	$	9,507	$	185,223	$	—	$	194,730
Net loans		694,797		—		—		663,510		663,510
Mortgage servicing rights		600		—		—		600		600
Financial liabilities
Deposits	$	1,027,427	$	835,847	$	—	$	193,126	$	1,028,973
Other borrowings		1,754		—		—		1,546		1,546

Other financial instruments carried at amortized cost include cash and cash equivalents, restricted stock, bank-owned life insurance, accrued interest receivable, short-term borrowings, and accrued interest payable, all of which have a Level I fair value that approximates their carrying value. The Company also has unrecognized financial instruments on June 30, 2024 and December 31, 2023, related to commitments to extend credit and letters of credit. The aggregate contract amount of such financial instruments was approximately $292 million on June 30, 2024 and $282 million on December 31, 2023.

26

CSB BANCORP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 6 – FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)

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 7- ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table presents the changes in accumulated other comprehensive loss by component net of tax for the three and six months ended June 30, 2024 and 2023:

(Dollars in thousands)	Pretax			Tax Effect			After-tax
Three Months Ended June 30, 2024
Balance, beginning of period	$	(13,102	)	$	2,751			(10,351	)
Unrealized holding gain on available-for-sale securities arising during    the period		291			(61	)		230
Amortization of held-to-maturity discount resulting from transfer		46			(10	)		36
Total other comprehensive income		337			(71	)		266
Balance, end of period	$	(12,765	)	$	2,680		$	(10,085	)
Six Months Ended June 30, 2024
Balance, beginning of period	$	(12,999	)	$	2,729		$	(10,270	)
Unrealized holding gain on available-for-sale securities arising during    the period		147			(31	)		116
Amortization of held-to-maturity discount resulting from transfer		87			(18	)		69
Total other comprehensive income		234			(49	)		185
Balance, end of period	$	(12,765	)	$	2,680		$	(10,085	)
Three Months Ended June 30, 2023
Balance, beginning of period	$	(14,981	)	$	3,146		$	(11,835	)
Unrealized holding loss on available-for-sale securities arising during    the period		(1,923	)		404			(1,519	)
Amortization of held-to-maturity discount resulting from transfer		48			(10	)		38
Total other comprehensive loss		(1,875	)		394			(1,481	)
Balance, end of period	$	(16,856	)	$	3,540		$	(13,316	)
Six Months Ended June 30, 2023
Balance, beginning of period	$	(16,354	)	$	3,435		$	(12,919	)
Unrealized holding loss on available-for-sale securities arising during    the period		(596	)		125			(471	)
Amortization of held-to-maturity discount resulting from transfer		94			(20	)		74
Total other comprehensive loss		(502	)		105			(397	)
Balance, end of period	$	(16,856	)	$	3,540		$	(13,316	)

27

CSB BANCORP, INC.

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

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

The following management’s discussion and analysis focuses on the consolidated financial condition of the Company on June 30, 2024 as compared to December 31, 2023, and the consolidated results of operations for the three and six months ended June 30, 2024 compared to the same periods in 2023. The purpose of this discussion is to provide the reader with a more thorough understanding of the Consolidated Financial Statements. This discussion should be read in conjunction with the interim condensed Consolidated Financial Statements and related footnotes contained in Part I, Item 1 of this Quarterly Report.

FORWARD-LOOKING STATEMENTS

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

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

FINANCIAL CONDITION

Total assets decreased $11.4 million to $1.167 billion at June 30, 2024 compared to $1.179 billion at December 31, 2023. During the six months ended June 30, 2024, securities decreased $22 million, net loans increased $17 million, and cash and cash equivalents decreased $8 million. Deposits and short-term borrowings decreased $12 million.

Net loans increased $17 million, or 3%, as commercial and commercial real estate loans increased $9 million, or 2% compared to December 31, 2023 and residential real estate loans increased $4 million, or 3%, from December 31, 2023. Consumer refinance activity slowed from previous periods on mortgage loans, while home purchase activity remained stable despite limited inventory, and home equity line balances increased by $1 million. Residential mortgage loan originations for the six months ended June 30, 2024 totaled $22 million, a decrease from $25 million in mortgage originations during the six months ended June 30, 2023. Originations sold into the secondary market were $3 million and $2 million, respectively during the six months ended June 30, 2024 and June 30, 2023. The Bank originates and sells primarily fixed rate thirty-year mortgages into the secondary market.

The allowance for credit losses for loans increased $4 million from the year ago quarter to $10.6 million. A previously identified commercial lending relationship totaling $6.4 million experienced credit deterioration and was placed on nonaccrual during the second quarter 2024 while the company was being offered for sale. On July 23, 2024 the bank was notified that the borrower's company would cease operations. The relationship has a specific reserve of $4.1 million within the combined total allowance for expected credit losses.

Net charge-offs were $320 thousand, or an annualized 0.09% of average loans, in the current six-month period compared to net recoveries of $6 thousand, or 0.00% of average loans in the year-ago six-month period. At June 30, 2024, the allowance for credit losses to total loans was 1.47%. We believe the allowance level remains acceptable as a significant loss reserve has been established for one commercial loan relationship.

28

CSB BANCORP, INC.

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

Nonperforming loans increased $6.3 million to $6.7 million, or 0.93%, of total loans from $396 thousand, or 0.06% of total loans, on December 31, 2023. For the six months ended June 30, 2024, $6.4 million in loans were placed on nonaccrual status, $142 thousand in paydowns were received, and $26 thousand in personal loans were charged-off due to non-payment.

	June 30,			December 31,			June 30,
(Dollars in thousands)	2024			2023			2023
Non-performing loans	$	6,683		$	396		$	254
Other real estate		—			—			—
Repossessed assets		—			—			—
Allowance for credit losses		10,587			6,607			6,559
Total loans		721,916			701,404			664,605
Allowance for credit losses as a percentage of total loans		1.47	%		0.94	%		0.99	%
Allowance for credit losses to total nonperforming loans		158			1,668			2,582

The ratio of gross loans to deposits was 71% at June 30, 2024, compared to 68% at December 31, 2023.

The Company has no exposure to government-sponsored enterprise preferred stocks, collateralized debt obligations, or trust preferred securities. Management has considered industry analyst reports, sector credit reports, and the volatility within the bond market in concluding that the gross unrealized losses of $44.8 million within the available-for-sale and held-to-maturity portfolios as of June 30, 2024, was primarily the result of current market yields compared to the yields at the time the investments were purchased by the Company and not due to credit quality. As a result, all embedded security losses on June 30, 2024, are considered temporary and no allowance for credit loss is necessary.

The weighted average life of total debt securities was 5.54 years at June 30, 2024 as compared to 5.09 years at December 31, 2023. If interest rates declined 100 basis points, the weighted average life was estimated to fall to 5.30 years at June 30, 2024 and 4.98 years at December 31, 2023. If interest rates rose 100 basis points the weighted average life would be expected to increase to 5.67 years at June 30, 2024 and 5.16 years at December 31, 2023.

Accrued interest receivable and other assets increased $1 million from December 31, 2023. This increase was primarily related to increases in prepaid expenses and the Company's deferred income tax asset.

Deposits decreased $4 million, or less than 1%, from December 31, 2023 with noninterest-bearing deposits decreasing approximately $24 million, or 8%, and interest-bearing deposit accounts increasing approximately $20 million, or 3%. Total deposits as of June 30, 2024 are $1.02 billion, or less than 1%, above June 30, 2023 deposit balances. On a year over year comparison, decreases were recognized in noninterest-bearing demand deposits of $37 million, interest bearing demand accounts of $35 million, and savings of $13 million. Increases were recognized in money market accounts of $24 million, and time deposits of $63 million. Deposits have increased somewhat as customers use excess liquid funds by moving funds into time certificates of deposit to take advantage of the increased interest rates. The estimated amount of uninsured deposits was $249 million, $254 million, and $272 million as of June 30, 2024, December 31, 2023, and June 30, 2023, respectively.

Short-term borrowings consisting of overnight repurchase agreements with retail customers decreased $8 million, or 22%, to $28 million at June 30, 2024 as compared to December 31, 2023 and other borrowings decreased $428 thousand as the Company repaid FHLB advances.

Total shareholders’ equity amounted to $110 million, or 9.5%, of total assets at June 30, 2024, an increase of $2 million, or 2%, from $108 million at December 31, 2023. The increase in shareholders’ equity during the six months ended June 30, 2024 was due to net income of $4.5 million, accumulated other comprehensive income (“AOCL”) of $185 thousand, less cash dividends of $2 million, and treasury stock repurchase of $225 thousand. AOCL decreased during the six months ended June 30, 2024 caused the AOCL primarily due to maturities with the US Treasury portfolio and improvements to pricing on the US Agency and Corporate bonds as AFS securities are marked to fair market value. This remaining unrealized loss in securities is temporary and is adjusted monthly for additional interest rate fluctuations, principal paydowns, calls, and maturities. The Company and the Bank met all regulatory capital requirements at June 30, 2024 as shown in the Capital Resources section of this report.

29

CSB BANCORP, INC.

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

RESULTS OF OPERATIONS

Three months ended June 30, 2024 and 2023

For the quarters ended June 30, 2024 and 2023, the Company recorded net income of $1.6 million and $3.6 million and $0.61 and $1.36 per share, respectively. The $2 million decrease in net income for the period was primarily the result of the provision for credit losses and off-balance sheet commitments of $2.9 million compared to the provision for credit losses in the prior year period of $140 thousand. The decrease of $69 thousand in net interest income was offset by a $235 thousand decrease in noninterest expenses, and an $8 thousand increase in noninterest income. The federal income tax provision decreased $546 thousand. Pre-provision net revenue ("PPNR"), (a non-GAAP measure), totaled $4.9 million for the quarter ended June 30, 2024, an increase of $174 thousand, or 4%, from the prior year's second quarter.

Return on average assets and return on average equity were 0.56% and 5.89%, respectively, for the three-month period of 2024, compared to 1.27% and 14.62%, respectively for the same quarter in 2023.

Average Balance Sheets and Net Interest Margin Analysis

	For the Three Months Ended June 30,
	2024							2023
(Dollars in thousands)	Average balance1		Interest		Average rate2			Average balance1		Interest		Average rate2
ASSETS
Federal Funds Sold	$	446	$	6		5.41	%	$	—	$	—		—	%
Interest-earning deposits		26,903		373		5.58			34,601		444		5.15
Taxable securities		334,253		1,817		2.19			368,959		1,945		2.11
Tax-exempt securities 4		18,999		112		2.37			22,187		129		2.33
Loans 3,4		717,105		10,229		5.74			660,004		8,717		5.30
Total interest-earning assets		1,097,706		12,537		4.59	%		1,085,751		11,235		4.15