CSB Bancorp, Inc.
For the period ended Mar 31, 2025. Filed May 13, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 13, 2025
CSBBStored price and day change unavailable
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0000950170-24-126930
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-13.
0000950170-25-070022
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 57 previous paragraphs and 44 current paragraphs.
23 unchanged; 19 reworded; 2 added; 10 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (2)
Current report
Noninterest income decreased $76 thousand, or 4%, compared to first quarter of 2024. The decrease was primarily the result of a $116 thousand decrease in trust services, partially offset by a $28 thousand increase in the earnings on bank owned life insurance.
Current report
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Removed paragraphs (10)
Previous report
Noninterest income increased $104 thousand, or 6%, compared to third quarter of 2023. The increase was primarily the result of a $59 thousand increase in gain on sale of mortgage loans to the secondary market, a $28 thousand increase in the unrealized gain on equity securities, a $24 thousand increase in earnings on bank owned life insurance, and a $15 thousand increase in trust and brokerage fees. Offsetting decreases were recognized in service charges related to deposit overdraft fees and credit card fees.
Previous report
RESULTS OF OPERATIONS
Previous report
Nine months ended September 30, 2024, and 2023
Previous report
For the nine months ended September 30, 2024, and 2023, the Company recorded net income of $7.7 million and $11.1 million and $2.89 and $4.12 per share, respectively. The $3.4 million decrease in net income for the nine-month period was primarily the result of the provision for credit losses and off-balance sheet commitments of $4.7 million compared to the provision for credit losses in the prior year period of $286 thousand and an increase in noninterest expenses of $576 thousand. These decreases to net income were partially offset by an increase in noninterest income of $256 thousand and an increase in net interest income of $491 thousand. PPNR totaled $14.2 million for the nine months ended September 30, 2024, an increase of $171 thousand, or 1%, from the prior year's nine months.
Previous report
The federal income tax provision was $918 thousand lower during the nine-month period in 2024 than in 2023. Return on average assets and return on average equity were 0.88% and 9.30%, respectively, for the nine months ended September 30, 2024, compared to 1.28% and 14.85%, respectively for the same period in 2023.
Previous report
Interest income for the nine months ended September 30, 2024, was $38 million representing a $5 million increase, or 14%, compared to the same period in 2023. This increase was primarily due to volume and yield increases on loans along with rate increases on interest-earning deposits in other banks and taxable securities for the period ended September 30, 2024, as compared to the same period in 2023. Interest expense for the nine months ended September 30, 2024, was $11 million, an increase of $4 million, or 62%, from the same period in 2023. The increase in interest expense occurred primarily due to an increase in rates on most interest-bearing liabilities for the nine months ended September 30, 2024, as well as a shift in balances into higher rate time deposits.
Previous report
Noninterest income for the nine months ended September 30, 2024, was $5.3 million, an increase of $256 thousand, or 5%, compared to the same period in 2023. Fees from trust and brokerage services increased $182 thousand for the period due to a one time fee collected in the first quarter. The gain on the sale of mortgage loans to the secondary market increased $109 thousand to $215 thousand for the nine months ended September 30, 2024, as improved pricing for smaller balance mortgage loans attracted buyers and some mortgage loan refinancing. Earnings on bank owned life insurance policies increased $65 thousand for the period. Service charges on deposit accounts decreased $52 thousand, or 6%, compared to the same period in 2023 primarily from decreases in overdraft fees. Credit card fee income decreased $51 thousand, or 10%.
Previous report
Noninterest expenses for the nine months ended September 30, 2024, increased $576 thousand, or 3%, compared to the same period in 2023. Professional and director fees increased $87 thousand for the nine months ended September 30, 2024, as compared to the same period in 2023.Debit card expense increased $74 thousand, or 15%, primarily due to processing increases. Financial institutions tax increased $72 thousand, or 13%, based on increased capital. Occupancy and equipment expenses increased $70 thousand over the same period in 2023 with an increase in maintenance expense. Salaries and employee benefits increased $69 thousand, or less than 1%. Marketing and public relations expense increased $49 thousand, or 13%, with increases in community related activities. Software increased $35 thousand, or 3%.
Previous report
Federal income tax expense decreased $918 thousand, or 34%, for the nine months ended September 30, 2024, as compared to the same period in 2023. The provision for income taxes was $1.8 million (effective rate of 18.9%) for the nine months ended September 30, 2024, compared to $2.7 million (effective rate of 19.7%) for the same period ended 2023.
Previous report
CONTROLS AND PROCEDURES
Reworded paragraphs (19)
Previous wording
The following management’s discussion and analysis focuses on the consolidated financial condition of the Company on September 30, 2024 as compared to December 31, 2023, and the consolidated results of operations for the three and nine months ended September 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.
Current wording
The following management’s discussion and analysis focuses on the consolidated financial condition of the Company on March 31, 2025 as compared to December 31, 2024, and the consolidated results of operations for the three months ended March 31, 2025 compared to the same period in 2024. 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.
Previous wording
Total assets increased $30 million to $1.21 billion at September 30, 2024 compared to $1.18 billion at December 31, 2023. During the nine months ended September 30, 2024, securities decreased $23 million, net loans increased $18 million, and cash and cash equivalents increased $32 million. Deposits and short-term borrowings increased $26 million.
Current wording
Total assets increased $27 million to $1.22 billion at March 31, 2025 compared to $1.19 billion at December 31, 2024. During the three months ended March 31, 2025, securities decreased $10 million, net loans increased $23 million, and cash and cash equivalents increased $15 million. Deposits and short-term borrowings increased $25 million.
Previous wording
Net loans increased $18 million, or 3%, as commercial and commercial real estate loans increased $1 million, or less than 1%, compared to December 31, 2023 and residential real estate loans increased $8 million, or 5%, from December 31, 2023. Construction loans increased $8 million, or 16%, 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 $2 million. Residential mortgage loan originations, including home equity lines, for the nine months ended September 30, 2024 totaled $39 million, a slight increase from $38 million in mortgage originations during the nine months ended September 30, 2023. Mortgage loan originations sold into the secondary market were $7 million and $3 million, respectively during the nine months ended September 30, 2024 and September 30, 2023. The Bank originates and sells primarily fixed rate thirty-year mortgages into the secondary market.
Current wording
Net loans increased $23 million, or 3%, as commercial and commercial real estate loans increased $15 million, or 3%, compared to December 31, 2024 and residential real estate loans increased $2 million, or 1%, from December 31, 2024. Construction loans increased $6 million, or 9%, from December 31, 2024. Consumer refinance activity remains slow on mortgage loans, while home purchase activity remains stable despite limited inventory, and home equity line balances increased by $1 million. Residential mortgage loan originations, including home equity lines, for the three months ended March 31, 2025 totaled $11 million, an increase from $9 million in mortgage originations during the three months ended March 31, 2024. Mortgage loan originations sold into the secondary market increased slightly to $1.5 million from $1.2 million, respectively during the three months ended March 31, 2025 and March 31, 2024. The Bank originates and sells primarily fixed rate thirty-year mortgages into the secondary market.
Previous wording
The allowance for credit losses for loans increased $617 thousand from December 31, 2023 to $7.2 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 credit was charged down in third quarter 2024 by $4.1 million as the liquidation of assets is in process.
Current wording
The allowance for credit losses for loans increased $379 thousand from December 31, 2024 to $8 million.
Previous wording
Net charge-offs were $4.3 million, or an annualized 0.81% of average loans, in the current nine-month period compared to net recoveries of $125 thousand, or (0.03%) of average loans in the year-ago nine-month period. At September 30, 2024, the allowance for credit losses to total loans was 1%. We believe the allowance level is appropriate given the level of problem loans and composition of the overall loan portfolio in the current economic environment.
Current wording
The increase in the allowance was primarily due to the volume increase in loans originated. Net charge-offs were $29 thousand, or an annualized 0.02% of average loans, in the current three-month period compared to net charge-offs of $74 thousand, or 0.04% of average loans in the year-ago three-month period. At March 31, 2025, the allowance for credit losses to total loans was 1.05%. We believe the allowance level is appropriate given the level of problem loans and composition of the overall loan portfolio in the current economic environment.
Previous wording
Nonperforming loans increased $3 million to $3.4 million, or 0.47%, of total loans from $396 thousand, or 0.06% of total loans, on December 31, 2023. For the nine months ended September 30, 2024, $7 million in loans were placed on nonaccrual status, $253 thousand in paydowns were received, and $4.1 million in loans were charged-off due to non-payment.
Current wording
Nonperforming loans decreased $109 thousand to $1.6 million, or 0.21%, of total loans from $1.7 million, or 0.23% of total loans, on December 31, 2024. For the three months ended March 31, 2025, $224 thousand in loans were placed on nonaccrual status, $22 thousand in paydowns were received, and $27 thousand in loans were charged-off due to non-payment.
Previous wording
The ratio of gross loans to deposits was 67% at September 30, 2024, compared to 68% at December 31, 2023.
Current wording
The ratio of gross loans to deposits was 71% at March 31, 2025 and December 31, 2024.
Previous wording
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 $34 million within the available-for-sale and held-to-maturity portfolios as of September 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 September 30, 2024, are considered temporary and no allowance for credit loss is necessary.
Current wording
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 $35 million within the available-for-sale and held-to-maturity portfolios as of March 31, 2025, 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 March 31, 2025, are considered temporary and no allowance for credit loss is necessary.
Previous wording
The weighted average life of total debt securities was 5.23 years at September 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 4.98 years at September 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 5.42 years at September 30, 2024 and 5.16 years at December 31, 2023.
Current wording
The weighted average life of total debt securities was 5.44 years at March 31, 2025 as compared to 5.14 years at December 31, 2024. If interest rates declined 100 basis points, the weighted average life was estimated to fall to 5.16 years at March 31, 2025. If interest rates rose 100 basis points the weighted average life would be expected to increase to 5.70 years at March 31, 2025.
Previous wording
Deposits increased $43 million, or 4%, from December 31, 2023 with noninterest-bearing deposits decreasing approximately $15 million, or 5%, and interest-bearing deposit accounts increasing approximately $58 million, or 8%. Total deposits as of September 30, 2024 are $1.07 billion, or 5%, above September 30, 2023 deposit balances. On a year over year comparison, decreases were recognized in noninterest-bearing demand deposits of $13 million, interest bearing demand accounts of $19 million, and savings accounts of $7 million. Increases were recognized in money market accounts of $29 million, and time deposits of $63 million. Deposits have increased as customers move excess liquid funds into money market accounts and time certificates of deposit to take advantage of the increased interest rates. The estimated amount of uninsured deposits was $275 million, $254 million, and $267 million as of September 30, 2024, December 31, 2023, and September 30, 2023, respectively.
Current wording
Deposits increased $26 million, or 2%, from December 31, 2024 with noninterest-bearing deposits increasing approximately $2 million, or less than 1%, and interest-bearing deposit accounts increasing approximately $24 million, or 3%. Total deposits as of March 31, 2025 are $1.07 billion, or 6%, above March 31, 2024 deposit balances. On a year over year comparison, increases were recognized in noninterest-bearing demand deposits of $5 million, savings accounts of $2 million, money market accounts of $9 million, and time deposits of $50 million. Decreases were recognized in interest bearing demand accounts of $6 million. Deposits have increased as customers move excess liquid funds into money market accounts and time certificates of deposit to take advantage of the increased interest rates. The estimated amount of uninsured deposits was $262 million, $244 million, and $249 million as of March 31, 2025, December 31, 2024, and March 31, 2024, respectively.
Previous wording
Short-term borrowings consisting of overnight repurchase agreements with retail customers decreased $17 million, or 46%, to $19 million at September 30, 2024 as compared to December 31, 2023 as customers moved money into higher interest rate money market and time deposit accounts. Other borrowings decreased $458 thousand as the Company repaid FHLB advances.
Current wording
Short-term borrowings consisting of overnight repurchase agreements with retail customers decreased $702 thousand, or 3%, to $25 million at March 31, 2025 as compared to December 31, 2024 as customers moved money into higher interest rate money market and time deposit accounts. Other borrowings decreased $30 thousand as the Company repaid FHLB advances.
Previous wording
Total shareholders’ equity amounted to $115 million, or 9.5%, of total assets at September 30, 2024, an increase of $7 million, or 7%, from $108 million at December 31, 2023. The increase in shareholders’ equity during the nine months ended September 30, 2024 was due to net income of $7.7 million, other comprehensive income of $3 million, less cash dividends of $3 million, and treasury stock repurchase of $397 thousand. Total accumulated other comprehensive loss ("AOCL") decreased during the nine months ended September 30, 2024 due to decreases in interest rates and improvements in pricing in government 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 September 30, 2024 as shown in the Capital Resources section of this report.
Current wording
Total shareholders’ equity amounted to $118 million, or 9.7%, of total assets at March 31, 2025, an increase of $3.5 million, or 3%, from $115 million at December 31, 2024. The increase in shareholders’ equity during the three months ended March 31, 2025 was due to net income of $3.6 million, other comprehensive income of $1.3 million, less cash dividends of $1.1 million, and treasury stock repurchases of $328 thousand. Total accumulated other comprehensive loss ("AOCL") decreased during the three months ended March 31, 2025 due to decreases in interest rates and improvements in pricing in government agency and corporate bonds as AFS securities are marked to fair 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 March 31, 2025 as shown in the Capital Resources section of this report.
Previous wording
For the quarters ended September 30, 2024 and 2023, the Company recorded net income of $3.1 million and $3.5 million and $1.18 and $1.30 per share, respectively. The $300 thousand decrease in net income for the period was primarily the result of the provision for credit losses and off-balance sheet commitments of $700 thousand compared to the provision for credit losses in the prior year period of $177 thousand. The increase of $377 thousand in net interest income and $104 thousand increase in noninteret income was offset by a $388 thousand increase in noninterest expenses. The federal income tax provision decreased $94 thousand. Pre-provision net revenue ("PPNR"), (a non-GAAP measure), totaled $4.6 million for the quarter ended September 30, 2024, an increase of $93 thousand, or 2%, from the prior year's third quarter.
Current wording
For the quarters ended March 31, 2025 and 2024, the Company recorded net income of $3.6 million and $2.9 million and $1.37 and $1.10 per share, respectively. The $683 thousand increase in net income for the period was primarily the result of the provision for credit losses and off-balance sheet commitments of $402 thousand compared to the provision for credit losses in the prior year period of $1.2 million. The increase of $533 thousand in net interest income partially offset by a $76 thousand decrease in noninterest income and a $339 thousand increase in noninterest expenses. The federal income tax provision increased $185 thousand. Pre-provision net revenue ("PPNR"), (a non-GAAP measure), totaled $4.9 million for the quarter ended March 31, 2025, an increase of $118 thousand, or 2.5%, from the prior year's first quarter.
Previous wording
Return on average assets and return on average equity were 1.05% and 11.14%, respectively, for the three-month period of 2024, compared to 1.19% and 13.63%, respectively for the same quarter in 2023.
Current wording
Return on average assets and return on average equity were 1.22% and 12.58%, respectively, for the three-month period of 2025, compared to 1.02% and 10.84%, respectively for the same quarter in 2024.
Previous wording
Interest income for the quarter ended September 30, 2024, was $13.2 million representing a $1.5 million, or 13% increase, compared to the same period in 2023. This increase was primarily due to increased interest rates and increased volumes on loans and interest-earning deposits in other banks. These increases were partially offset by the volume decreases in taxable securities to the comparable period. Average interest-earning deposit rates decreased 4 basis points while loan rates rose 41 basis points, and taxable securities' interest rates rose 7 basis points for the quarter ended September 30, 2024 as compared to the same period in 2023. Interest expense for the quarter ended September 30, 2024 was $4 million, an increase of $1.1 million, or 38%, from the same quarter in 2023. The increase in interest expense occurred primarily due to the increase in interest rates and volume increases of money market and time deposit accounts for the quarter ended September 30, 2024.
Current wording
Interest income for the quarter ended March 31, 2025, was $13.3 million representing a $725 thousand, or 6% increase, compared to the same period in 2024. This increase was primarily due to higher average balances of loans and interest-earning deposits in other banks. These increases were partially offset by the volume decreases in taxable securities to the comparable period. Rates on average interest-earning deposits in other banks decreased 89 basis points, while loan rates rose 1 basis point, and taxable securities' interest rates increased 15 basis points for the quarter ended March 31, 2025 as compared to the same period in 2024. Interest expense for the quarter ended March 31, 2025 was $3.6 million, an increase of $192 thousand, or 6%, from the same quarter in 2024. The increase in interest expense occurred primarily due to volume increases in money market and time deposit accounts as well as the increase in rates on time deposit accounts for the quarter ended March 31, 2025.
Previous wording
For the quarter ended September 30, 2024, the bank recognized net charge-offs of $4 million, compared to $119 thousand net recoveries for the same quarter in 2023. The provision for credit losses on loans in the current quarter of $645 thousand, compared to a provision of $13 thousand in the same quarter ended 2023. The company recorded a $55 thousand provision for credit loss on off-balance commitments in the third quarter 2024 compared to a $164 thousand provision in the third quarter of 2023. The quarter increase results primarily from a single commercial credit facility that ceased operations on July 23, 2024. The credit facility has been charged down by $4.1 million with the company's assets being liquidated through the court system which increased the historical loss component of the calculation.
Current wording
For the quarter ended March 31, 2025, the bank recognized net charge-offs of $29 thousand, compared to $74 thousand net charge-offs for the same quarter in 2024. The provision for credit losses on loans in the current quarter of $408 thousand, compared to a provision of $603 thousand in the same quarter ended 2024. The company recorded a $6 thousand recovery for credit loss expense on off-balance commitments in the first quarter 2025 compared to a $549 thousand provision in the first quarter of 2024. The quarter increase results primarily from the increase in loan volume during first quarter 2025.
Previous wording
Noninterest expense increased $388 thousand, or 6%, from third quarter 2023. Salary and employee benefit costs increased $227 thousand, or 7%, compared to the prior year quarter with increases in base salary, insurance, and social security taxes. Marketing and public relation costs increased $38 thousand, or 31%, with increases in community related activities. Professional and directors’ fees increased $25 thousand, or 7%, state financial institutions tax increased $24 thousand, or 13%, due to the increase in capital. Debit card expenses increased $7 thousand, or 4%, primarily with increases in processing. Software expense increased $13 thousand, or 3%. Equipment expense increased $25 thousand, or 13%, with increasing costs of maintenance contracts and repairs. The Company’s third quarter efficiency ratio increased to 58.2% compared to 57.0% in the prior year.
Current wording
Noninterest expense increased $339 thousand, or 6%, from first quarter 2024. Salary and employee benefit costs increased $228 thousand, or 7%, compared to the prior year quarter with increases in base salary, insurance, and social security taxes. Occupancy expense costs increased $73 thousand, or 26%, with increases in snow removal costs. Professional and directors’ fees increased $81 thousand, or 24%, state financial institutions tax increased $14 thousand, or 6%, due to the increase in capital. Debit card expenses increased $22 thousand, or 12%, primarily with increases in processing. Software expense decreased $25 thousand, or 6%, and equipment expense decreased $18 thousand, or 8%. The Company’s first quarter efficiency ratio increased to 56.8% compared to 56.0% in the prior year.
Previous wording
Federal income tax expense decreased $94 thousand, or 11%, for the quarter ended September 30, 2024 as compared to the third quarter 2023. The provision for income taxes was $756 thousand (effective rate of 19.4%) for the quarter ended September 30, 2024, compared to $850 thousand (effective rate of 19.6%) for the same quarter ended 2023.
Current wording
Federal income tax expense increased $185 thousand, or 27%, for the quarter ended March 31, 2025 as compared to the first quarter 2024. The provision for income taxes was $878 thousand (effective rate of 19.5%) for the quarter ended March 31, 2025, compared to $693 thousand (effective rate of 19.1%) for the same quarter ended 2024.
Previous wording
The Company maintained a strong capital position with tangible common equity to tangible assets of 9.2% at September 30, 2024 compared with 8.8% at December 31, 2023.
Current wording
The Company maintained a strong capital position with tangible common equity to tangible assets of 9.4% at March 31, 2025 compared with 9.3% at December 31, 2024.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
1 Average balances have been computed on an average daily basis.
Previous report — wording carried elsewhere
2 Average rates have been computed based on the amortized cost of the corresponding asset or liability.
Previous report — wording carried elsewhere
3 Average loan balances include nonaccrual loans.
Previous report — wording carried elsewhere
4 Taxable equivalent adjustments have been computed assuming a 21% tax rate in 2024 and 2023 (non-GAAP).
Previous report — wording carried elsewhere
For the nine months ended September 30, 2024, the provision for credit losses and off-balance sheet was $5 million, compared to $286 thousand for the same period in 2023. For more discussion see Results of Operations, three months. The provision for credit losses is determined based on management’s calculation of the adequacy of the allowance for credit 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.